Indian equity benchmarks extended their losses on Tuesday as the expiry of the temporary US-Iran ceasefire raised concerns about renewed tensions in the Middle East. Rising crude oil prices and weakness in IT stocks further dampened sentiment, keeping markets under pressure for a second consecutive session.
The BSE Sensex opened at 77,418.97, down 309.19 points from the previous close. By 9:44 am, it was trading 261.04 points lower, or 0.34%, at 77,467.12. During early trade, the index touched a high of 77,575.21 and a low of 77,362.19.
The Nifty 50 opened at 24,223.85 and stood at 24,232.15 at 9:44 am, down 55.50 points or 0.23%. It moved between an early high of 24,269.65 and a low of 24,211.10.
The weak opening followed a cautious start to the week as investors monitored developments in the Middle East and assessed the potential impact of higher energy prices on the Indian economy.
CRUDE OIL RISES ABOVE $91
Crude oil remained the biggest concern for investors, with Brent crude climbing back above $91 a barrel as expectations of an extension to the temporary US-Iran ceasefire weakened.
Iran has indicated that it could adopt a more offensive stance, while US President Donald Trump has ruled out extending the ceasefire. The developments have increased concerns over potential disruptions to energy supplies.
Higher crude prices are particularly significant for India, which relies heavily on oil imports. A prolonged rise in energy costs could increase import expenses, fuel inflation and put pressure on corporate margins and overall economic growth.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted two developments that could influence markets, particularly during early trading.
"One, Brent crude has again spiked above $91 on escalation of tensions between Iran and the U.S. Two, the U.S. 10-year bond yield has increased to 4.73% and this is negative for FII inflows which had turned positive in July and August so far," he said.
IT STOCKS DRAG MARKETS LOWER
IT stocks emerged as some of the biggest contributors to the market decline, with the Nifty IT index falling 1.24% in early trade.
Among major Sensex constituents, Infosys was the worst performer, declining 1.58%. Asian Paints fell 1.59%, while HCLTech and Tech Mahindra dropped 1.18% and 1.09%, respectively.
TCS declined 0.94% and LT fell 0.56%, adding to the pressure on the benchmark indices. The broader IT and telecom index also declined 0.65%.
SENSEX GAINERS AND LOSERS
Among the Sensex gainers, Sun Pharma rose 0.64%, while Reliance Industries and Axis Bank advanced 0.55% each. Tata Steel gained 0.27%, Maruti rose 0.25% and M&M added 0.24%.
Eternal was up 0.24%, NTPC gained 0.21%, Bajaj Finance advanced 0.14% and Power Grid rose 0.13%.
On the other hand, Asian Paints fell 1.59%, Infosys declined 1.58%, HCLTech dropped 1.18%, Tech Mahindra lost 1.09% and TCS slipped 0.94%. Hindustan Unilever fell 0.88%.
IndiGo and Bharti Airtel declined 1.49% each, while Adani Ports dropped 0.74% and Ultratech Cement fell 0.57%.
REALTY AND FINANCIAL STOCKS ALSO WEAK
Selling pressure extended across several sectors. The Nifty Realty index fell 1.60%, while Nifty Financial Services Ex-Bank declined 0.56% and Nifty Midcap Financial Services dropped 0.75%.
Nifty PSU Bank fell 0.36% and Nifty Financial Services 25/50 declined 0.37%. Nifty FMCG and Nifty Media were both down 0.14%.
Some sectors managed to buck the broader trend. Nifty Pharma gained 0.51%, Nifty Healthcare rose 0.43% and Nifty Auto advanced 0.32%. Nifty Oil & Gas climbed 0.64%, while Nifty Consumer Durables added 0.13%.
BROADER MARKET REMAINS UNDER PRESSURE
The broader market also traded lower, although small-cap stocks showed relative resilience.
The Nifty 100 declined 0.19%, while the Nifty 200 and Nifty 500 fell 0.25% and 0.21%, respectively. The Nifty Midcap 50 dropped 0.43% and the Nifty Midcap 100 declined 0.47%.
The Nifty Smallcap 100, however, edged up 0.04%.
The India VIX, a measure of expected market volatility, rose 0.52% to 11.39, indicating a modest increase in investor caution.
DIIS COULD SUPPORT THE MARKET
Despite the near-term volatility, Vijayakumar said the Indian economy remains resilient and that there are signs of a recovery in corporate earnings growth.
"The tailwind for the market is the resilient Indian economy and clear indications of a turnaround in earnings growth. This tailwind will encourage DIIs, flush with funds, to buy any significant dip in the market," he said.
He added that retail investors could use market declines to gradually build positions in high-quality stocks with a long-term view, while cautioning that elevated uncertainty could keep markets volatile.
"Retail investors can use the dips in the market to slowly accumulate high quality stocks for the long-term. Heightened uncertainty will keep the market volatile," Vijayakumar said.
