Benchmark indices ended sharply lower on Tuesday as elevated crude oil prices, rising global bond yields and caution ahead of the US Federal Reserve meeting weighed on investor sentiment.
Gains in IT stocks and HDFC Bank provided some support, but heavy selling across most sectors dragged the broader market lower.
The BSE Sensex opened at 75,369.63 and closed at 74,003.82, falling 777.94 points or 1.04%. The Nifty 50 opened at 23,576.15 and ended at 23,118.60, down 279.50 points or 1.19%.
The decline came after both indices had opened higher earlier in the session. The Nifty eventually closed at its lowest level in five months.
The broader market underperformed the benchmark indices. The Nifty 100 fell 1.44%, while the Nifty 200 and Nifty 500 declined 1.58% and 1.70%, respectively.
The Nifty Midcap 50 fell 2.08%, the Nifty Midcap 100 declined 2.12% and the Nifty Smallcap 100 dropped 2.43%. India VIX, which tracks market volatility, rose 7.99% to 13.27.
Most sectoral indices ended in the red. Nifty Realty was the worst performer, falling 4.04%, followed by Nifty Chemicals, which declined 3.42%. Nifty Financial Services Ex-Bank fell 2.77%, Nifty MidSmall Financial Services declined 2.63% and Nifty Metal fell 2.54%.
Nifty Consumer Durables fell 2.41%, Nifty PSU Bank declined 2.29%, Nifty Media dropped 2.17% and Nifty Auto fell 2.01%. Nifty Financial Services 25/50 declined 1.89%, while Nifty Pharma, Nifty Healthcare and Nifty Oil & Gas fell 1.30%, 1.17% and 1.29%, respectively.
Nifty IT was the only major sectoral index to end higher, gaining 2.19%.
IT stocks were among the biggest gainers on the Sensex after comments calling for a slowdown in AI development eased concerns about the rapid disruption of traditional IT services.
HCLTech was the top Sensex gainer, rising 3.98%. Infosys gained 3.64%, Tech Mahindra rose 2.31% and TCS climbed 2.18%. HDFC Bank also gained 1.27% after the lender sent the names of two CEO candidates to the Reserve Bank of India.
On the other hand, BEL was the biggest Sensex loser, falling 6.04%. IndiGo declined 3.95%, Titan fell 3.10%, Bajaj Finserv dropped 3.09% and Adani Ports declined 3.03%.
Tata Steel gained 0.30%, while Bharti Airtel slipped 0.11%. Sun Pharma fell 0.38%, ITC declined 0.86%, NTPC fell 0.99% and Maruti dropped 1.17%.
Among other major stocks, Reliance Industries fell 1.75%, ICICI Bank declined 1.97%, Power Grid dropped 2.08%, Kotak Mahindra Bank fell 2.17%, Axis Bank declined 2.18%, UltraTech Cement fell 2.24%, Eternal dropped 2.29%, Bajaj Finance declined 2.37%, Asian Paints fell 2.51%, Trent dropped 2.62%, SBI declined 2.77% and M&M fell 2.88%.
Crude oil prices remained a key concern for investors as tensions in the Middle East deepened. Brent crude was trading at $106.92 a barrel, up 1.17%, while WTI crude was at $103.29, up 1.87%.
Yemen’s Iran-aligned Houthis launched a new wave of attacks on Saudi Arabia and were strengthening positions along the western coast of Yemen near the Red Sea, according to the information provided by Reuters.
Global bond yields also remained elevated ahead of the US Federal Reserve meeting this week. Rising Treasury yields have added to concerns around a prolonged high-interest-rate environment and continued to weigh on emerging-market sentiment.
“Elevated oil prices, surging treasury yields and line-up on big IPOs explains much of the current market weakness. If U.S. hikes rate, it will propel India to do so as well as it will need to protect its currency,” said Arun Malhotra, fund manager at CapGrow Capital.
Vinod Nair, Head of Research, Geojit Investments Limited, said elevated crude prices and rising global bond yields continued to weigh on the domestic market.
“Domestic markets remained under pressure, extending their recent correction as elevated crude oil prices and rising global bond yields weighed on sentiment. Investors stayed cautious ahead of key central bank meetings this week, with growing expectations of further policy tightening by major economies,” Nair said.
He said concerns about a prolonged high-interest-rate environment, particularly in the US, kept Treasury yields near multi-year highs and continued to weigh on emerging-market sentiment amid persistent foreign outflows.
“Mid- and small-cap stocks lagged benchmark indices, while most sectors closed sharply lower. However, IT stocks outperformed as comments suggesting slower AI development eased concerns over the rapid disruption of traditional IT services,” Nair said.
“In the near term, sustained high oil prices and elevated bond yields may continue to pressure risk appetite, though strong domestic fundamentals and value buying by local investors could help contain downside risks,” he added.
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