Govt’s fuel duty cut seen as timely cushion; markets may have passed peak panic: Deven Choksey

In a volatile global environment marked by elevated crude prices and geopolitical uncertainty, the Indian government’s decision to cut excise duties on fuel is being viewed by market participants as a proactive step to contain inflation and support demand. Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd believes the move reflects timely intervention, much like the policy responses seen during the COVID-19 crisis.

Responding to ET Now on whether it is premature to start factoring in earnings downgrades for Indian companies, Choksey suggested that the government’s actions could help soften the blow from global headwinds.

“I guess government should be complimented for acting in time. I guess they did so during the covid times, they are doing this activity of cutting down the excise on fuel at a time when entire world is desperate on other side. By way of cutting down the excise duties, they are ensuring few things. The consumer prices are not increasing, the fuel-related activities, as a result of which the inflationary pressure would remain under control. Though one may argue that on a fiscal deficit side it may have an impact of 35 to 40 bps from what it projected at 4.3, it could possibly go up to 4.7 if the full-year accounts are to be taken into account,” he said.

But suppose if this is a temporary measure, good credit should go to government that in advance time they are taking care of inflationary pressure, making sure that the corporates do not end up losing money and at the same time the consumer demand continues to remain buoyant. So, overall I believe that it is a welcome move, consumer benefits, OMCs benefits,” he added.

Relief for Consumers, Cushion for OMCs

A key question, however, is whether the benefits of the excise duty cut will be directly felt by consumers or primarily serve as a buffer for oil marketing companies (OMCs).Choksey clarified that the impact is already indirectly benefiting consumers by preventing further price hikes.“Yes, the point is important that if they are not increasing the price, that means effectively they have passed it on to the consumer. Otherwise, the OMCs have no choice but to increase the prices in the rising crude oil scenario. Now with this excise duty cut coming in their favour, they have a cushion of Rs 10 per litre on petrol and on diesel. They do not pass it on to the consumer and that is the benefit that the consumer gets eventually,” he explained.Balancing Domestic Needs and Global OpportunitiesThe government has also raised export duties on petroleum products such as ATF, diesel, and petrol—a move that could potentially impact private refiners. However, Choksey views this as part of a broader balancing strategy.

“Even if it is increase in export duty, the price is still at parity level or slightly at the discounted level compared to the overall global prices. So, government is playing a balancing act according to me. On one side, when the global consumer is willing to pay the price, they are charging the price. On the other side, the domestic consumer should be protected, they are reducing the price. It is a perfect balancing act. Good credit goes to government for this again,” he noted.

Market Outlook: Panic Phase Likely OverOn the broader equity market outlook, Choksey indicated that the worst of the fear-driven selling may be behind us, with markets now awaiting positive triggers—particularly on the geopolitical front.

“The market has possibly completed the panic portion. I believe the fear factor is probably going out at this point of time. Entire market, including the global markets, is waiting for positive news to come on the war. Should it happen, then you will be seeing the upside which is unprecedented. So, in my viewpoint, instead of keeping the fear at the back of mind, I think that things are looking relatively more positive on prospects of war-related situation bringing up some positive news,” he said.

A Tactical Policy Move with Broader ImplicationsWhile concerns around fiscal slippage remain, the government’s decision appears to be aimed at preserving macroeconomic stability in the near term. By cushioning fuel prices, policymakers are attempting to protect both consumption and corporate margins—two critical pillars for sustaining economic growth.

For investors, the message seems clear: while global risks persist, domestic policy support and easing panic could provide a constructive backdrop for markets in the months ahead.