Indian Markets Capable Of Handling Global Shocks, Says Sebi Chairman

Sebi Chairman Tuhin Kanta Pandey on Monday said Indian financial markets have the ability to withstand external disruptions even as volatility rises due to the ongoing conflict in West Asia.

Speaking on the sidelines of a Regional Investors Seminar for Awareness, Pandey said global developments, especially those affecting crude oil supply chains, have increased uncertainty across financial markets worldwide.

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He stated that the conflict in West Asia has disrupted oil supplies and pushed up energy prices, creating inflation-related risks for economies across regions.

According to Pandey, the impact is not limited to oil prices alone, as secondary economic effects are also beginning to emerge across global markets.

Oil Prices And Inflation Risks In Focus

The Sebi chairman said higher crude oil prices remain a key concern because they influence inflation, currency movements and overall market sentiment.

This is because India relies on importing a large amount of crude oil needs, therefore any change in international prices will directly impact the Indian market.

In recent weeks, there has been an increase in crude oil prices due to the tension caused in West Asia and shipping problems close to Strait of Hormuz.

The rise in energy prices has also increased pressure on emerging market currencies, including the rupee, while global bond yields have remained elevated.

Pandey said financial markets across economies are interconnected and therefore global geopolitical events tend to affect investor sentiment internationally.

Domestic Investors Continue To Support Markets

Pandey acknowledged that foreign portfolio investors have withdrawn funds from Indian equities since September 2024.

However, he said domestic investors have continued to remain confident about Indian markets even with the volatility.

Strong participation from retail investors and domestic institutional investors has helped support market liquidity during periods of foreign fund outflows.

Indian equities have experienced pressure in recent months due to elevated oil prices, concerns around inflation, global trade uncertainty and weakening emerging market sentiment.

Markets Expected To Return To Normal Trend

The Sebi chairman said volatility and market corrections are a normal part of financial markets, particularly during periods of geopolitical stress.

According to Pandey, Indian markets have historically demonstrated resilience during global disruptions and have returned to their broader growth trajectory after periods of instability.

The benchmark equity indices have witnessed fluctuations in recent weeks amid concerns around crude oil prices, foreign capital flows and global monetary conditions.

While the world is still being affected by geopolitical events, market players are also focusing on trends in inflation rates and exchange rates besides central bank policies.