Middle East has been under the grip of turmoil for some time and here in India, country has been under the grip of political scams and scandals. Unrest in Middle East is triggering the crude price spurts and political instability in India is triggering economical instability.
Middle East has been under fire for some time. Tunisia, Egypt, Yemen and Libya has been facing social unrest for some time and this is pushing the crude prices up. They are above $120/ barrel which is extremely dangerous for the countries like India which largely import crude. It will also lead Foreign Institutional Investors to withdraw fund from Indian stock market which largely depends upon FIIs for its upward march. So, collectively rise in crude price is hitting at economical prospects as well as stock markets in short term.
Rise in crude prices in international market has been contributing to Indian political instability which has been facing political scams and scandals. Indian government has been under fire by all sections of the society. Recently there one of the closest allies broke their ties with them, which has increased this instability. Indian stock markets have tanked more than 1.5 per cent.
If crude prices continue to rise and domestic political instability doesn’t end soon, it can further aggravate the situation. Stock markets have been correcting in last few months and investors have lost lot of their hard earned money. Governance is a major issue which is threatening Indian economical growth and if analysts are to believed then, crude prices may climb up to $150/barrel. India is already under huge fiscal deficit and it will further increase the subsidy burden on the government.
Rising crude and political instability is lethal for the Indian economy and therefore, it will impact the stock market too.
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