Indian equity benchmarks began Thursday’s trading session on a weak note, with both indices dropping nearly 1% due to a significant increase in crude oil prices, overshadowing gains from specific stocks. Sensex fell by 0.95% to 76,759.37, while Nifty declined by 0.96% to 23,943.45. Various sectors like auto, banking, realty, metal, consumer durables, and FMCG witnessed up to a 1% decrease.
Selling pressure was widespread, with several stocks like Eternal, Shriram Finance, IndiGo, M&M, Jio Financial Services, Tata Motors PV, Axis Bank, Grasim Industries, Asian Paints, ICICI Bank, and HDFC Bank being among the top losers. Additionally, Nifty 100, Nifty Midcap, Nifty 200, and Nifty 500 indices saw declines of up to around 1%.
Market volatility increased as the India VIX rose by 2.7% to 17.91. Analysts highlighted two key factors that could impact the markets in the near future. Firstly, the threat posed to India’s macroeconomic stability by Brent crude nearing $120, which could lead to growth risks and higher inflation. Secondly, the possibility of extended AI trade due to strong results from AI majors in the US and South Korea, potentially resulting in more portfolio outflows from India.
The Federal Reserve’s decision to maintain rates as expected may not have a significant impact, but the rise in US 10-year bond yields to 4.4% could encourage further capital outflows from India. Exit polls indicating the ruling party’s strengthened position could provide some sentiment support, although they are not expected to alter market fundamentals significantly. Investors are advised to focus on companies with better-than-expected Q4 results and promising outlooks.
Oil prices surged after reports of US President Donald Trump discussing measures with oil companies to mitigate the impact of a potential prolonged blockade of Iran’s ports, raising concerns about global crude supply disruptions. Meanwhile, the US Federal Reserve kept interest rates unchanged in line with predictions, while warning about inflation risks linked to the Iran conflict. Crude oil prices approached their 52-week highs, with Brent crude trading at $113.18 per barrel and US West Texas Intermediate at $109.64 per barrel.
