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Crude oil prices fell more than $6 to a fresh four-year low under $75 a barrel on Thursday after OPEC decided not to cut production, despite a huge oversupply in world markets. Members of the Organization of the Petroleum Exporting Countries (OPEC), which account for nearly 40 per cent of global oil output, met on Thursday to decide whether to cut production, after oil prices dropped over 30 per cent in just six months.

 Fund managers had earlier said that oil prices could plunge to $60 a barrel if OPEC failed to make significant cuts.

 India will be a big beneficiary if Brent crude prices indeed drop to $60 per barrel, provided the rupee continues to trade in the 58-62 range against the US dollar.

 For starters, petrol and diesel prices in the country will fall sharply because both these fuel have been decontrolled now. Going by past trends, petrol prices might fall below Rs 60 per litre if Brent crude prices drop below $60/barrel. If petrol prices fall below Rs 60/litre, it would be the first time since May 2011.

 Petrol prices have fallen sharply from nearly Rs 74 per litre to Rs 64 per litre since June as the international price of Indian crude basket has decreased from Rs 6,600 per barrel ($110.42 per barrel at 60.10 per dollar) in June to Rs 4800 per barrel ($78.27 per barrel at Rs 61.78 per dollar) in November.

 The above-mentioned illustration indicates that a further $20 per barrel drop in international crude could push petrol prices below Rs 60 per litre even if the government hikes excise duty further or oil marketing companies add another rupee or two to their margins.

 The sharp fall in global oil prices will also help the government. Global brokerage Nomura says every $10 per barrel fall in oil price can boost India’s GDP growth by around 0.1 percentage points, lower consumer inflation by about 0.2 per cent and improve current account balance by 0.5 per cent of GDP.

 Improving macro fundamentals will likely add further fuel to the stock market rally, analysts say. According to Bank of America Merrill Lynch, India gives positive returns in 3 months post sharp correction in crude.

 On 11 occasions since 1991 (when India embarked on a liberalization drive), Brent crude prices corrected by more than 20 per cent in three months. On 8 of these 11 occasions, Indian markets gave a positive return over the next 3 months with an average return of nearly 17 per cent, the investment bank said.