New Delhi, April 6 (NationPress) The rise in global crude oil prices exceeding $90 per barrel may start to heavily impact the earnings of Nifty companies, as highlighted in a recent report.

As per estimates from Bernstein analysts, for each $10 per barrel increase above $90, Nifty earnings could drop by 2-3 percent, with the effects worsening significantly at higher price points. Although crude oil has a limited direct connection to the index, its broader macroeconomic consequences, such as inflation, currency depreciation, and policy reactions, become more significant at elevated levels.

Bernstein noted that within the $60-$90 per barrel range, the impact on earnings remains gradual, with long-term earnings growth potentially slowing from 10-11 percent to approximately 7 percent.

However, once crude prices surpass $90, the pressure escalates as rising inflation begins to diminish both consumption and savings, which particularly affects sectors focused on consumers.

Higher oil prices also lead to a weaker rupee, raising costs for industries reliant on imports such as pharmaceuticals, cement, and chemicals, while increased logistics costs compress margins across various sectors.

"At elevated crude prices, the earnings pressure intensifies, with nearly 4 percent downside for each $10 increase beyond $90. When prices reach $120-125 per barrel, the potential impact could be severe enough to significantly reduce overall earnings," the report indicated.

From a sector perspective, financials—which contribute nearly half of Nifty earnings—are somewhat protected and may even benefit from a higher interest rate climate. IT firms may experience limited advantages from a depreciating rupee.

Conversely, consumer sectors and industries dependent on imports are anticipated to face the most significant challenges due to rising costs and a slowdown in demand. Within the energy sector, upstream companies might benefit from increased crude prices, while oil marketing firms could struggle with margin pressures.

The report concludes that sustained increases in crude oil prices present a considerable downside risk to earnings, especially if they persist above the $90 per barrel mark.

Brent crude futures rose by as much as 2 percent or $2.2 to $111.23 per barrel, nearing a 52-week high, while the US West Texas Intermediate (WTI) crude surged 3.53 percent or about $4 to $115.48.

On Monday, domestic headline indices exhibited negative trends, with the Sensex plummeting over 500 points or 0.72 percent to 72,790, hitting an intraday low, and Nifty dropping 150 points or 0.66 percent to 22,561, marking an intraday low.