Indian benchmark indices ended lower on Tuesday as a sharp rebound in crude oil prices and rising inflation concerns prompted investors to trim risk ahead of key inflation data from India and the US. The BSE Sensex declined 388.19 points, or 0.49%, to close at 78,154.25, while the NSE Nifty 50 fell 112.10 points, or 0.46%, to settle at 24,471.70. According to Outlook Business, market breadth remained mixed with 1,977 stocks advancing, 2,152 declining and 187 remaining unchanged on the NSE. The rally in crude oil shifted investor focus back to inflation risks, overshadowing an otherwise supportive corporate earnings season. As per Vinod Nair, Head of Research at Geojit Investments, "A sharp rebound in crude prices shifted market attention back to inflation risks, tempering investor enthusiasm despite a supportive earnings backdrop."
Brent crude, the global oil benchmark, rose towards $90 per barrel, adding significant pressure on equity markets and shifting investor focus back to inflation risks. As reported by Outlook Business, concerns over the disruptions in the Strait of Hormuz and the US-Iran negotiations kept sentiment guarded, particularly ahead of key inflation prints in India and the US. Higher oil prices remain a concern for India, the world's third-largest oil importer, as they could increase the country's import bill and add to inflationary pressures. The Indian rupee also weakened by 15 paise to close at 95.44 against the US dollar, with Jateen Trivedi from LKP Securities noting that "Brent crude moved higher towards $90 per barrel, raising concerns over India's import bill and limiting the rupee's recovery."
The pressure on Indian markets extends beyond immediate oil price concerns to broader economic implications. As the world's third-largest oil importer, higher crude prices quickly inflate India's import bill, requiring more US dollars to pay for oil and making other imports pricier in local-currency terms. According to Reuters, a larger oil bill can widen the current-account gap, increasing the need for foreign funding and putting pressure on the rupee. A weaker currency can keep inflation worries alive, which can push local bond yields higher as investors price in tighter policy or stickier prices. This combination can lift the "risk premium" investors demand and hit rate-sensitive corners of the Nifty 50, because higher yields make future profits look less valuable today. The currency will take cues from crude oil, the Dollar Index and FII flows, with US inflation data also likely to influence the dollar.
Sectoral performance remained mixed with Nifty Pharma gaining 1% and Nifty IT advancing 0.6%, while Nifty Realty, FMCG and Metal each declined around 1%. Among Nifty constituents, Tata Consumer Products, Max Healthcare, UltraTech Cement, Apollo Hospitals and Nestle India were the top losers, while Dr Reddy's Laboratories, Eternal, Tata Consultancy Services, Titan Company and Infosys emerged as the leading gainers. According to Outlook Business, the Nifty Midcap 100 index ended largely unchanged, while the Nifty Smallcap 100 rose 0.2%. In the broader market, Nifty Infrastructure slipped 0.8%, while Nifty Private Bank, Auto and Bank indices fell between 0.4% and 0.6%. Among major laggards in the Sensex pack, Bharti Airtel, Mahindra & Mahindra, UltraTech Cement, Adani Ports, Titan and Bajaj Finance were among the major decliners, while State Bank of India, Tech Mahindra, Axis Bank and Asian Paints were among the stocks trading higher.
According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the Nifty 50 ended the weekly expiry on the negative side and with that the consolidating range of 100 points broke on the lower side. As reported by LiveMint, since the introduction of CAS there was uncertainty regarding the closing of Nifty on the 1st weekly expiry of August series, but things have started to normalize. The monthly range is of 1,000 points with 24,600 and 24,800 as intermediate hurdles, while 24,200 is the immediate support. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the market was moving sideways despite expectations of an upward breakout, attributing the lack of momentum to the rise in Brent crude prices and continued uncertainty over US-Iran tensions. Foreign Institutional Investors (FIIs) bought equities worth ₹258.55 crore on Tuesday, according to exchange data, while in the previous session the Sensex declined 388.19 points to close at 78,154.25 and the Nifty fell 112.10 points to settle at 24,471.70.
