The equity benchmark indices Sensex and Nifty declined on Thursday, tracking a surge in crude oil prices, foreign fund outflows and weak cues from Asian markets.
The Sensex settled 852.49 points or 1.09 percent lower at to 77,664, while the broader Nifty declined to 24,173.05, down 205.05 points or 0.84 percent.
Twelve of the 16 major sectoral indices were in the red. The Nifty Smallcap100 and Nifty Midcap100 indices traded flat.
Among sectors, auto stocks declined 1.3 percent and were among the top losers. Financial heavyweights also slipped 0.8 percent, with ICICI Bank falling 1.6 percent and HDFC Bank down 0.8 percent.
Pharma stocks rose 2.3 percent on growth expectations. Brokerage Nomura said the domestic pharmaceutical market grew 10.1 percent year-on-year in March, with most companies under its coverage reporting growth ahead of estimates.
Key factors behind market decline
1) Surging crude prices: Crude oil prices rose for the fourth straight session, with Brent crude trading at USD 103.3 per barrel amid uncertainty over US–Iran negotiations.
“Oil markets remain a key concern, with Brent crude once again breaching the USD 100 mark and trading in the USD 100–106 per barrel range. The move reflects stalled US–Iran negotiations and the continuation of blockades on Iranian ports, raising concerns over potential disruptions to global supply,” Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.
2) Weak global cues: Asian markets, including South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng, were trading lower. Wall Street futures were down up to 0.75 percent.
“With total uncertainty becoming the new normal there is no clarity on the near-term direction of the market. With the duration of the war going beyond everyone’s initial expectations and the price of Brent crude bouncing back to USD 103 there is increasing risk to global growth in general and higher risk to India’s macros in particular,” VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said.
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3) Rupee declines: The rupee extended losses for the fourth consecutive session, slipping 34 paise to 94.12 against the US dollar. The currency remained under pressure due to rising crude prices and continued foreign fund outflows.
4) FII selling: Foreign institutional investors (FIIs) offloaded equities worth Rs 2,078.36 crore on Wednesday.
5) Geopolitical concerns: Global geopolitical worries remained in focus amid tensions in West Asia, including developments in the Strait of Hormuz and stalled negotiations betweent the US and Iran.
“The primary overhang continues to be geopolitical developments in the Middle East. Recent escalation in the US–Iran situation, including reports of naval confrontations and renewed warnings of potential strikes, has significantly increased uncertainty. The risk surrounding the Strait of Hormuz—a critical global energy corridor—has pushed Brent crude prices above the USD 100 per barrel mark,” Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.
6) HSBC downgrads Indian equities: HSBC downgraded Indian equities to “underweight” from “neutral”, citing the impact of elevated energy prices.
Technical Outlook
Anand James, Chief Market Strategist at Geojit Investments, said “Even though dips were contained near 24,340 for Nifty, the downside marker pencilled in for yesterday, there were not enough signs of recovery thereafter, suggesting that the 24150-23980 objectives are poised for test today. For now, 24500 will remain the level to breach in order to confirm strength.”
