Indian equity markets ended lower on Tuesday, with benchmark indices coming under pressure as a sharp rise in crude oil prices revived concerns over inflation and higher energy costs.
The BSE Sensex declined 388.19 points, or 0.49 per cent, to settle at 78,154.25, while the NSE Nifty 50 fell 112.10 points, or 0.46 per cent, to close at 24,471.70. The weakness in domestic equities came amid a cautious global environment and renewed worries that elevated crude prices could put pressure on inflation and corporate margins.
Brent crude oil prices rose more than 2 per cent to around USD 89 per barrel at the time of filing, triggering concerns among investors about the impact of higher energy costs on the broader economy. The sharp rebound in oil prices shifted market attention away from the otherwise supportive corporate earnings environment.
Vinod Nair, Head of Research at Geojit Investments Limited, said the rise in crude prices had brought inflation concerns back into focus and reduced investor enthusiasm despite encouraging earnings. "A sharp rebound in crude prices shifted market attention back to inflation risks, tempering investor enthusiasm despite a supportive earnings backdrop," Nair said.
He added that concerns surrounding possible disruptions in the Strait of Hormuz, along with uncertainty over US-Iran negotiations, also contributed to the cautious mood in the market. Investors remained particularly watchful ahead of key inflation data releases from India and the US, which could provide further clues about the direction of interest rates and monetary policy.
The risk-off sentiment was reflected across several sectors, particularly those considered vulnerable to higher energy and input costs. On the NSE, the Nifty FMCG index declined 1.17 per cent, while Nifty Metal fell 0.95 per cent and Nifty Realty dropped 0.99 per cent.
The Nifty Auto index declined 0.55 per cent, while Nifty Media fell 0.43 per cent. Nifty Private Bank also ended 0.56 per cent lower. Nifty PSU Bank, however, remained largely stable and edged up 0.01 per cent.
Some pockets of the market managed to withstand the broader selling pressure. Nifty Consumer Durables gained 0.15 per cent, while Nifty IT advanced 0.61 per cent. Nifty Pharma was among the strongest performers, rising 1.02 per cent during the session.
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Among individual Nifty 50 constituents, Dr Reddy's Laboratories, Eternal, TCS, Infosys, HCL Technologies and Bajaj Finserv were among the leading gainers. Tata Consumer Products, Max Healthcare, Nestle India and UltraTech Cement featured among the major losers.
Despite Tuesday's decline, Nair said strong foreign inflows and encouraging corporate earnings continued to provide support to the market and helped prevent a sharper correction. "Nevertheless, robust foreign inflows and encouraging corporate earnings are limiting the downside risk," he said.
Asian markets presented a mixed picture. Japan's Nikkei 225 gained more than 2 per cent to 66,970, while Singapore's Straits Times index rose 0.98 per cent to 5,754. Taiwan's weighted index advanced 0.43 per cent to 45,120, and South Korea's KOSPI climbed 0.72 per cent to 6,345.
In contrast, Hong Kong's Hang Seng index declined more than 1 per cent to 25,671. Domestic investors are now likely to closely track crude oil movements, inflation data, global geopolitical developments and foreign fund flows for further market direction. While strong earnings continue to offer some support, sustained pressure from elevated oil prices could keep Indian equities volatile in the near term.
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