Crude oil prices may surge to $130-140 if West Asia War drags on, warns Kotak Securities

The auto sector is highly sensitive to commodity costs and consumer discretionary spending. Rising crude oil prices directly impact fuel costs for consumers and raw material costs for manufacturers, leading to potential demand contraction and margin pressure.

Maintain a bearish bias on auto stocks, particularly those with high exposure to fuel-sensitive segments (e.g., two-wheelers, commercial vehicles), and look for shorting opportunities on rallies, with strict stop-losses.

For Indian markets, this story mainly matters for MARUTI, M&M, ONGC and the Automobiles, Oil & Gas, Banking & Financial Services pocket. The current signal is bearish, so traders should look for follow-through in price, volume, and sector breadth instead of reacting to the headline alone.

Watch whether the next market session confirms the setup described here: Higher crude oil prices increase fuel costs for consumers and raw material costs for auto manufacturers, impacting demand and profitability. Recent auto stock crashes (online context) confirm this sensitivity. Similar to Maruti, M&M will face increased input costs and potential demand slowdown due to higher fuel prices, impacting its automotive and farm equipment segments. Recent auto stock crashes (online context) confirm this sensitivity. Also track volume confirmation, sector participation, and whether the move holds beyond the first reaction.

• •Brent crude could reach USD 130-140 if the West Asia war continues.
• •India's inflation is expected to rise due to higher oil prices.
• •India's GDP growth may slow down.
• •The Indian rupee faces pressure.
• •A US recession is a possibility.