Crude prices remain critical for India as they directly affect the country's macro parameters, said Rahul Singh, investment chief of equities at Tata Mutual Fund.
"I think the critical point remains crude prices because that is something which affects India's macro parameters much more than the other emerging markets," he said in an interview to CNBC TV18. "And I think that remains a key thing to watch."
Singh also said that crude and commodity prices are likely to impact rupee and, in turn, the country's Balance of Payments (BoP).
"The probability of things going into a tailspin on the rupee or on the BoP is basically going to be a function of commodity prices, and more specifically crude prices because we are a net consumer of crude and various other commodities," he added.
The analyst mentioned that prices of crude oil are no more determined only by demand and supply but also by geopolitical factors.
"It is no longer about demand and supply of crude oil. It is more about what's going to happen geopolitically, how the OPEC is going to react to it, and if will they try and protect the prices," he explained.
On Wednesday, OPEC and its allies (a group often referred to as OPEC+) announced that they will slash oil production by 2 million barrels per day – the biggest cut since the start of the pandemic. The group says it’s taking the action to help boost oil prices.
Meanwhile, Singh believes that global macro conditions still continue to be uncertain and will remain so over the next three to six months given major global central banks continue to hike interest rates.
Talking about consumption patterns, he said that India is witnessing strong growth in discretionary consumption in the urban segment, whereas a slowdown in the rural segment is being observed.