Benchmark indices were largely flat in early trade on Thursday as crude oil prices remained above the $100-a-barrel mark amid escalating Middle East tensions, while weakness in IT and other rate-sensitive stocks kept investors cautious ahead of key US inflation data.
At 10:36 am IST, the BSE Sensex was down 10.29 points, or 0.01%, at 74,753.94. The index had opened at 74,742.54. The Nifty 50 was up 1.35 points, or 0.01%, at 23,432.85 after opening at 23,446.60.
Brent crude was trading at $101.05 a barrel, while WTI crude was at $96.12. Oil prices have remained elevated as the Middle East conflict intensifies, raising concerns over inflation, India’s import bill and corporate profitability. Iran has said it attacked 10 ships near the Strait of Hormuz after the US sank five Iranian oil tankers.
The market is also awaiting US inflation data, which could influence expectations around the Federal Reserve’s policy decision next week. Higher oil prices could add to inflationary pressures and make the path for monetary easing more difficult.
“The undertone of markets remains fragile as Brent crossed the $100 per barrel mark amid escalating US-Iran tensions, intensifying concerns over inflation and growth,” said Rajesh Palviya, head of research at Axis Direct.
The Nifty IT index was down 0.06%, while the Auto index declined 0.60%. HCLTech was the biggest Sensex loser, falling 1.19%, followed by M&M, which declined 0.98%, and IndiGo, which fell 0.94%. Maruti slipped 0.48%, while Sun Pharma declined 0.44% and Reliance fell 0.42%.
Among other major laggards, Asian Paints fell 0.32%, Tata Steel declined 0.32%, BEL dropped 0.30%, Adani Ports fell 0.29% and Trent declined 0.26%.
Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, “With Nifty dipping below the 23500 resistance, the market construct has turned weak. Technically the market is vulnerable to further correction, and the fundamental macro trends continue to deteriorate. Brent crude has spiked above $101 and the US 10-year yield has moved up to 4.83%. Probability of a Fed rate hike this month has increased and this is also contributing to the concerns in the market.”
He added that if crude remains above $100 for an extended period, it could affect India’s GDP growth and corporate earnings, with energy-sensitive sectors such as aviation, paints, adhesives, tyres and chemicals likely to face pressure.
Some sectors managed to buck the broader weakness. The Nifty PSU Bank index rose 0.92%, while Media gained 0.84%. Financial Services 25/50 advanced 0.16%, Private Bank rose 0.22% and Oil & Gas gained 0.24%.
PowerGrid was the top Sensex gainer, rising 1.22%, followed by Axis Bank, which gained 1.06%. Tech Mahindra rose 0.84%, SBI gained 0.72%, Bajaj Finance advanced 0.66% and Titan rose 0.46%.
NTPC gained 0.39%, Bajaj Finserv rose 0.31%, HDFC Bank advanced 0.15%, Infosys gained 0.13%, Bharti Airtel rose 0.12% and ITC was up 0.11%.
The broader market was under pressure, with the Nifty 100 down 0.07%, Nifty 200 declining 0.13% and Nifty 500 falling 0.13%. The Nifty Midcap 50 declined 0.40%, while the Nifty Midcap 100 fell 0.35%. The Nifty Smallcap 100 was down 0.06%.
India VIX, however, declined 0.71% to 11.84.
Vijayakumar said defensive sectors such as FMCG, along with pharmaceuticals and healthcare, are likely to remain relatively resilient in the current environment. He added that while large private-sector banking stocks remain technically weak, their fundamentals are strong and the risk-reward ratio favours long-term investors.
With crude oil holding above $100, investors are likely to remain focused on developments in the Middle East, oil prices and upcoming US inflation data for cues on the market’s next move.