Benchmark equity indices ended lower on Thursday, extending their losing streak to a fourth consecutive session as Brent crude neared the $100-a-barrel mark amid escalating tensions in the Middle East, fuelling concerns over inflation, corporate profitability and India's import bill.
The BSE Sensex dropped 363.66 points, or 0.47%, to close at 76,391.39, while the NSE Nifty50 declined 126.65 points, or 0.53%, to settle at 23,869.60. The decline marked Dalal Street's longest losing streak in seven weeks.
Brent crude surged 4.77% to $98.56 per barrel, while WTI crude rose 4.13% to $90.42 as fears of disruptions to global oil supplies intensified.
Crude rally weighs on market sentiment
Investor sentiment remained subdued as crude prices continued their sharp ascent following the escalating conflict in the Middle East.
For India, the world's third-largest importer and consumer of crude oil, elevated energy prices raise concerns over higher inflation, a widening current account deficit and pressure on corporate earnings.
Vinod Nair, Head of Research at Geojit Investments Limited, said rising oil prices continued to cloud market sentiment.
"With crude oil prices approaching the USD 100/bbl amid concerns over further disruptions to global energy supplies, investor sentiment remained subdued as markets reassessed inflation risks and corporate margins. Recent macroeconomic indicators suggest that prolonged geopolitical tensions are increasingly filtering into the domestic economy, reflected in rising WPI and a moderation in business activity," he said.
He added that persistent strength in oil prices has reinforced expectations that global interest rates could remain elevated for longer, dampening investor appetite for emerging markets.
Banks, realty and broader markets under pressure
Selling was broad-based, with most sectoral indices ending in negative territory.
The Nifty Chemicals index led the losses, falling 1.87%, followed by Nifty Realty (-1.81%), Nifty MidSmall IT & Telecom (-1.52%), Nifty MidSmall Financial Services (-1.23%), Nifty PSU Bank (-1.00%), Nifty Oil & Gas (-1.02%), Nifty Private Bank (-0.77%) and Nifty Financial Services (-0.62%).
The broader market also witnessed significant weakness. The Nifty Midcap 50 declined 1.08%, Nifty Smallcap 100 fell 1.01%, Nifty Midcap 100 lost 0.99% and the Nifty 500 slipped 0.70%.
India VIX rose 1.37% to 13.48, reflecting increased caution among investors.
Among Sensex constituents, Adani Ports emerged as the biggest laggard, declining 2.26%, followed by Bajaj Finance (-1.96%), IndiGo (-1.89%), Axis Bank (-1.36%), SBI (-1.22%), Tata Steel (-1.21%), Maruti Suzuki (-1.11%), Reliance Industries (-1.05%) and Bharti Airtel (-0.97%).
Pharmaceutical stocks also remained under pressure after disappointing quarterly earnings from Dr Reddy's Laboratories, Cipla and HPCL dampened sentiment.
Auto stocks buck the trend
Despite the broader weakness, the Nifty Auto index advanced 0.70% to emerge as the top-performing sector.
Mahindra & Mahindra led the Sensex gainers with a rise of 1.70%, followed by TCS (+1.51%), Eternal (+1.16%), Bajaj Finserv (+0.63%), HCLTech (+0.61%), Kotak Mahindra Bank (+0.59%) and Sun Pharma (+0.57%).
FMCG stocks also displayed resilience, with Hindustan Unilever gaining 0.29% and ITC adding 0.21%.
Nair said investors continued to favour companies reporting strong earnings despite the broader market volatility.
"Selling pressure was broad-based across sectors; however, auto stocks outperformed on the back of strong quarterly earnings, highlighting that despite prevailing market volatility, investors continue to favour businesses demonstrating resilient earnings growth, healthy demand trends and stronger visibility on future performance," he said.
With Brent crude edging closer to the psychologically significant $100-per-barrel level, investors are likely to remain cautious in the near term as they track developments in the Middle East and their potential impact on inflation and financial markets.
