Benchmark equity indices closed lower on Friday, extending their losing streak to a fifth straight session as investors remained wary of escalating tensions in the Middle East and their potential impact on global crude oil prices. However, markets trimmed most of their intraday losses after oil prices retreated from above the $100-per-barrel mark.
The BSE Sensex dropped 331.62 points, or 0.43%, to settle at 76,059.77, while the NSE Nifty50 declined 102.15 points, or 0.43%, to close at 23,767.45.
Brent crude, which briefly crossed the key $100-per-barrel level during the session, fell nearly 3% to $97.71 a barrel by the close. WTI crude also eased 2.68% to $89.72, helping benchmark indices recover from sharper losses seen earlier in the day.
Crude prices, global concerns weigh on sentiment
Investor sentiment remained subdued as geopolitical tensions in the Middle East continued to influence market mood.
Higher crude prices remain a significant concern for India, the world's third-largest importer of crude oil, as they can increase inflationary pressures, widen the current account deficit and impact corporate profitability.
Vinod Nair, Head of Research at Geojit Investments Limited, said elevated oil prices and rising global bond yields continue to pose challenges for the markets.
"Market sentiment is likely to remain under pressure in the near term, as sustained oil prices in a higher range could begin to adversely impact key macroeconomic indicators and growth dynamics. The US 10-year yield has climbed to a 52-week high despite crude oil trading well below its crisis-era peak, reflecting the bond market's concerns over energy-led inflation risks, resilient labour market conditions, and a persistently hawkish Fed," he said.
Nair added that these factors have strengthened expectations of another US interest rate hike, while fresh US tariffs have created additional challenges for export-oriented economies.
"Washington's new tariffs on imports added another headwind for export-driven economies, with technology-heavy markets having been hit the most as higher rates weigh on growth and investors are increasingly seeking to diversify their concentrated exposure to other emerging market opportunities," he said.
IT and banking stocks provide support
Despite the overall weakness, the Nifty IT index rose 0.82%, emerging as one of the top-performing sectoral indices after recovering from early losses.
Media stocks also performed well, with the Nifty Media index gaining 1.86%, while the Nifty MidSmall IT & Telecom index advanced 1.11%. The Nifty PSU Bank index added 0.58%, supported by buying interest in banking shares.
Among the Sensex gainers, HCLTech topped the list with a 1.94% rise, followed by ITC, Axis Bank, TCS, Trent, Maruti Suzuki, Kotak Mahindra Bank, SBI and Reliance Industries.
Nair said Bank Nifty continued to outperform due to attractive valuations and a favourable credit growth outlook.
"Bank Nifty outperformed, supported by favourable valuations and credit growth outlooks," he said.
Realty, auto and metal stocks decline
Selling pressure continued across several sectors.
The Nifty Realty index was the biggest loser, falling 1.53%, followed by Auto (-1.10%), Metal (-0.55%), Oil & Gas (-0.46%), Financial Services Ex-Bank (-0.41%) and Pharma (-0.41%).
The broader market also ended mostly lower. The Nifty Smallcap 100 fell 0.32%, while the Nifty 100, Nifty 200 and Nifty 500 also closed in negative territory. The Nifty Midcap 50 was the only broader index to end higher, rising 0.11%.
India VIX climbed 4.11% to 14.03, indicating that market volatility remained elevated despite the late recovery in benchmark indices.
Among the biggest laggards on the Sensex were Eternal, Bajaj Finance, Mahindra & Mahindra, Bharti Airtel, Asian Paints and Infosys.
Although Dalal Street recovered significantly from its intraday lows as crude oil prices cooled, investors are expected to remain cautious in the near term while closely tracking developments in the Middle East, crude oil prices and global interest rate expectations.
