Benchmark indices came under heavy pressure in early Friday trading as Brent crude climbed above $108 per barrel. Rising tensions in the Middle East sparked concerns about inflation, economic expansion and corporate earnings, while higher US bond yields and cautious investor sentiment added to the market weakness.
At 9:38 am, the BSE Sensex was trading 622.18 points, or 0.83%, lower at 74,280.41. It had opened at 74,309.16. The Nifty 50 fell 217.60 points, or 0.93%, to 23,260.20 after starting the session at 23,270.30.
Brent crude was up 0.92% at $108.62 a barrel, while West Texas Intermediate (WTI) rose 0.83% to $103.33. Oil prices have jumped as the expanding Middle East conflict threatens vital shipping routes, including the Strait of Hormuz and the Red Sea.
According to military sources quoted by Reuters, Iran-backed Houthis took control of Yemen’s port city of Mocha on Thursday and moved along the Red Sea coastline towards strategically important islands. The development has intensified fears of disruptions to global shipping, with attacks on tankers also increasing around the Strait of Hormuz.
The rise in crude prices is particularly concerning for India, the world’s third-largest oil importer. Prolonged oil prices above $100 a barrel could increase the country’s import bill, fuel inflation and put pressure on economic growth as well as corporate profitability.
“Market headwinds are becoming stronger as the Middle East conflict intensifies. Brent crude has climbed to around $108. If these elevated prices persist, or rise further, the impact on India’s GDP growth and, in turn, corporate earnings could be significant,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
He also pointed to higher US bond yields as another major challenge for equities. The 10-year US Treasury yield is nearing the 5% level, which could become an important turning point for global stock markets.
IT STOCKS BUCK THE BROADER TREND
Most sectors remained under pressure, although IT stocks emerged as one of the few areas showing gains. The Nifty IT index advanced 0.38%, with Tech Mahindra rising 1.84%, HCLTech gaining 1.23% and Infosys moving up 1.03%.
Bharti Airtel added 0.56%, while ITC climbed 0.39%. Adani Ports was marginally higher by 0.07%.
Among the major losers, Bajaj Finance dropped 2.58%, making it the biggest drag on the Sensex. IndiGo declined 2.29%, M&M fell 2.22%, Tata Steel slipped 1.99%, Axis Bank lost 1.98% and UltraTech Cement declined 1.97%.
L&T fell 1.41%, Kotak Mahindra Bank declined 1.34%, Bajaj Finserv slipped 1.30%, Reliance Industries dropped 1.25% and HDFC Bank was down 1.17%.
The selling was widespread, with 15 of the 16 major sectoral indices trading in negative territory.
The Nifty Realty index suffered the steepest decline among sectoral indices, falling 3.84%. Metal declined 2.64%, Consumer Durables fell 1.77%, Financial Services Ex-Bank dropped 1.73%, Financial Services 25/50 declined 1.40% and MidSmall Financial Services slipped 1.40%.
Auto stocks declined 1.38%, PSU Bank fell 1.14%, Chemicals dropped 1.25% and Healthcare declined 0.79%. Pharma slipped 0.78%, FMCG fell 0.44%, Media declined 0.41% and Oil & Gas dropped 0.67%.
Nifty Private Bank declined 0.98%, while MidSmall Healthcare fell 0.91%. Nifty500 Healthcare was down 0.85%.
The Nifty MidSmall IT & Telecom index was among the gainers, rising 0.21%, while the Nifty Financial Services 25/50 index declined 1.40%.
BROADER MARKET UNDER HEAVY PRESSURE
The broader market also witnessed significant selling. The Nifty 100 declined 1.01%, Nifty 200 fell 1.10% and Nifty 500 dropped 1.11%.
The Nifty Midcap 50 declined 1.37%, while the Nifty Midcap 100 slipped 1.43%. The Nifty Smallcap 100 fell 1.30%.
The India VIX, which measures expected market volatility, jumped 6.04% to 12.51, signalling increased nervousness among investors.
Vijayakumar also noted that the strong activity in India’s IPO market was diverting substantial investor funds from the secondary market, adding to the pressure on equities.
“Given the overall situation, investors need to remain cautious in this difficult environment,” he said.
With Brent crude trading above $108 a barrel and the US 10-year Treasury yield approaching 5%, investors are expected to closely monitor developments in the Middle East, movements in crude prices and global bond yields while assessing the potential impact on India’s economic growth and corporate earnings.
