Indian equity markets opened lower on Tuesday, with BSE Sensex opening at 75,637.76 points, down 377.52 points or 0.50%, while NSE Nifty 50 slipped 93.25 points or 0.39% to start the session at 23,722.60 points. According to latest reports, the decline mirrored cautious trends across broader Asian markets amid concerns over the impact of government's austerity measures and rising crude oil prices. Among sectoral indices, Nifty IT emerged as the top loser in early trade, falling 1.67% to 28,838.85 points, while Nifty Financial Services 25/50 and Nifty Private Bank indices also traded lower by 0.46% each. Nifty PSU Bank and Nifty Consumer Durables indices declined 0.38% and 0.18% respectively, while Nifty FMCG and Nifty Healthcare registered marginal losses. On the positive side, Nifty Oil & Gas advanced 0.61% as government cuts royalty charges on domestic production of oil and gas, Nifty Metal rose 0.58% to 13,001.35 points, and Nifty Realty also traded in positive territory, up 0.23%.
The sell-off in the Indian stock market has been driven by concerns over the economic impact of persistently elevated crude oil prices amid the prolonged US-Iran war in the Middle East, as reported by The Times of India. Uncertainty surrounding a potential US-Iran peace deal has further kept investors on edge. Selling pressure intensified after Prime Minister Narendra Modi's speech on May 10, which the market interpreted as a sign of mounting macroeconomic stress, according to Hariprasad K, Research Analyst and Founder of Livelong Wealth. The remarks were viewed as part of a broader crisis management response to rising current account deficit concerns triggered by high crude oil prices amid the US-Iran war. Brent crude futures climbed 30 cents, or 0.29%, to $104.51 a barrel, while US West Texas Intermediate crude gained 31 cents, or 0.32%, to $98.38 per barrel as of 0002 GMT, with both benchmark contracts having already advanced nearly 2.8% during Monday's session.
According to Ruchit Jain, Head of Equity Technical Research at Motilal Oswal Financial Services, the breach of the 24,000 mark in the Nifty has raised concerns over near-term market sentiment amid geopolitical tensions and a spike in crude oil prices. However, he believes the current decline appears more like a corrective phase within the broader uptrend rather than the start of a full-fledged bear market. Jain noted that the index is approaching a strong support zone in the 23,500-23,600 range, where buying interest could emerge, while the 50-day exponential moving average near 24,300 is likely to act as an immediate hurdle on any pullback rally. Ajit Mishra, SVP Research at Religare Broking, highlighted that the Nifty has once again approached the lower band of its consolidation range near the 23,800 zone. A decisive breakdown below this level could trigger the next leg of decline toward 23,500, followed by the major support zone around 23,150, while on the upside, immediate resistance is placed near 24,100, followed by a stronger hurdle around 24,400.
Despite the pressure, analysts maintain that the ongoing decline is still being viewed as a corrective pullback within the broader uptrend rather than the beginning of a bear market. According to Ruchit Jain, a sustained move above the 24,300 level would be necessary for the index to regain bullish momentum, while failure to hold the support zone could keep markets volatile in the short term. Some analysts suggest a balanced strategy for investors, with options data showing put writing concentrated at the 23,800 and 23,600 levels as potential support zones, while significant call writing was observed at the 23,900 and 24,000 strikes indicating resistance in that range. The Nifty's Put-Call Ratio (PCR) declined sharply to 0.76 on May 11 from 0.93 in the previous session, indicating rising caution among traders and increasing call writing activity at higher levels. India VIX, the market volatility gauge, surged 10.17% to 18.55, signalling rising discomfort for bulls amid heightened uncertainty.
While the broader market faces pressure, certain sectors remain resilient to the current austerity measures. Pharmaceuticals is the segment which is not impacted at all since the sector has inelastic demand and gains from rupee depreciation, as noted by VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. FMCG also will be least impacted from the current measures. However, realty, energy and auto stocks witnessed sharp declines, while defensive sectors such as pharma and FMCG showed relative resilience. Selling pressure remained broad-based, with most sectoral indices ending lower. Among Sensex stocks, Titan emerged as the worst performer, sliding nearly 7%, while other major losers included InterGlobe Aviation, State Bank of India, Bharti Airtel, Eternal and Reliance Industries. On the gaining side, Sun Pharma, Hindustan Unilever, Adani Ports, Kotak Mahindra Bank, Axis Bank and ICICI Bank ended with gains. VK Vijayakumar noted that the prime minister's austerity appeal had impacted sectors expected to witness reduced consumption, with stocks of sectors like jewellery, travel and hotels bearing the brunt of selling yesterday.
