As we approach the end of 2014, one of the year’s biggest stories has been the declining price of oil. On June 20, 2014, Brent was at nearly $115. On November 13, 2014, it fell below $78, a cumulative decline of over 32%.1
Through November 13, 2014, India’s equities, measured by the BSE Sensex, had appreciated more than 30%.2 That is in an environment where broad emerging market equities3 have been basically flat.
India: World’s Fourth-Largest Oil Consumer 4
The bottom line: India uses a lot of oil, but it has very limited oil resources. The country depends on oil imports for more than 70% of its oil needs.5
We believe that, as the price of oil falls, India’s economic growth prospects—and by extension, equity market performance—may improve.
Historical Study: 3-Month 20% Brent Oil Price Declines…
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