Indian equity markets traded lower on Tuesday as crude-sensitive sectors faced significant selling pressure. According to Moneycontrol, the Sensex was down 357.39 points, or 0.46 percent, at 77,259.01 as of 12:03 pm, while the Nifty fell 99 points, or 0.41 percent, to 24,112. Market breadth remained weak with 2,312 stocks declining against 1,356 advancing on the NSE. The broader market weakness reflects investor concerns over Brent crude futures climbing above $85 per barrel, their highest level since mid-June, following the United States' decision to reinstate its blockade of Iranian shipping and impose a 20 percent transit fee on cargo moving through the Strait of Hormuz.
The Nifty Auto index declined nearly 2 percent on Tuesday, with Tube Investments of India and Ashok Leyland emerging as top laggards, falling over 3 percent each as Brent crude prices surged towards the $85 per barrel mark. As per Business Standard, Tube Investments of India's stock was down 2.97 percent at ₹2,834.10 as of 11:11 AM, while Ashok Leyland fell 3.7 percent intraday to ₹153. TVS Motor, Tata Motors Passenger Vehicles, and Mahindra & Mahindra also declined over 1.5 percent each, with TVS Motor hitting an intraday low of ₹3,589.70, Tata Motors Passenger Vehicles falling to ₹335.60, and Mahindra and Mahindra declining to ₹3,086.20. The weakness reflects concerns over higher crude oil prices increasing input costs for tyre manufacturers through higher natural and synthetic rubber-related costs, while auto ancillary companies face pressure from rising logistics, freight, and raw material expenses.
The selloff extended beyond Indian markets as MSCI's gauge of Asia Pacific shares fell 1.8%, with South Korea's Kospi sliding 8%. According to Bloomberg, futures contracts for the Nasdaq 100 Index retreated 1.3%, while European shares were set to drop 1% at the open. The global weakness reflects investor concerns over fresh US strikes on Iran that pushed up oil prices and fueled bets on Federal Reserve interest-rate hikes. Treasuries dropped across the curve with the yield on the rate-sensitive two-year note climbing to the highest level since February 2025, as the dollar strengthened against all Group-of-10 peers amid Middle East tensions.
Oil marketing companies were under pressure as higher crude prices raise the cost of procuring crude oil and can compress refining and marketing margins if retail fuel price revisions lag. According to Moneycontrol, Indian Oil Corp dropped 2.11 percent, HPCL fell 2.04 percent, and BPCL lost 1.09 percent. The weakness reflects concerns over margin compression in the downstream oil sector. Upstream oil producer Oil India bucked the trend, rising 1.86 percent as higher crude prices are expected to support its earnings, while ONGC traded largely flat, slipping 0.17 percent. West Texas Intermediate crude rose 4.4% to $74.53 a barrel, while Brent crude jumped 4.3% to $79.25 a barrel as the move heightened concerns over global energy supplies.
Despite the current correction, analysts remain constructive on the auto sector's long-term prospects despite near-term volatility. As per Business Standard, Ponmudi R from Enrich Money noted that the weakness is primarily a combination of global risk-off sentiment and profit booking rather than any major deterioration in the sector's fundamentals. The Nifty Auto index has delivered strong long-term returns, rising 12.98 percent over the past year, 70.83 percent over three years, and 154.19 percent over five years, though it's down 6.57 percent year-to-date. For long-term investors, this correction should be viewed as an opportunity to accumulate quality companies gradually rather than investing aggressively in a single phase, with analysts focusing on companies with strong balance sheets and sustainable earnings visibility.
