The Sensex managed to close 77 points higher at 75,315 points on Monday despite facing significant challenges from crude oil price surge and rupee weakness. According to market reports, the index opened the week's trading about 400 points down and slid in early trades to lose more than 1,000 points from Friday's close, but recovered smartly during the session. The recovery was primarily driven by aggressive foreign fund buying and some short covering during the closing hours, with ₹5,500 crore in total institutional inflows providing crucial support against broader market pressures.
Brent crude rallied to above $111 per barrel due to fresh tensions brewing between the US and Iran, as reported by market sources. This crude oil surge raised chances of higher inflation and higher interest rates in India since crude is the biggest import item for the country. Additionally, the Indian rupee hit a new low, trading near 96.5 against the US dollar, adding to market concerns about inflationary pressures and increasing the cost of imports. The combination of rising geopolitical tensions and currency weakness has created significant headwinds for the Indian market.
Foreign funds were aggressive buyers on Monday with a net inflow of ₹2,814 crore, while domestic institutions added ₹2,682 crore during the session, according to BSE data. The combined institutional inflow of ₹5,500 crore was focused primarily on large-cap stocks, providing crucial support against broader market pressures. Analysts noted this institutional buying was key to navigating the session's volatility, with buying concentrated in large cap stocks while mid and smallcap stocks witnessed selling pressure.
The day's session left investors poorer by a little over ₹2 lakh crore with BSE's market capitalisation now at about ₹458.4 lakh crore. The BSE midcap index closed 0.2% lower while the small-cap index saw a steeper decline of 1.5%, reflecting the selective nature of Monday's market movements where large cap stocks outperformed mid and smallcap segments. This divergence highlights investor caution towards smaller companies, which are often more vulnerable to economic downturns and currency depreciation, while large-cap stocks found support from institutional buying.
