Sensex, Nifty tank as Brent crude soars above $108; broad-based sell-off

At 9:38 am, the BSE Sensex was down 622.18 points, or 0.83%, at 74,280.41. The index had opened at 74,309.16. The Nifty 50 declined 217.60 points, or 0.93%, to 23,260.20 after opening at 23,270.30.

In Short

• Benchmark indices fell sharply as Brent crude crossed $108 a barrel
• Middle East tensions and US bond yield rise fuel market concerns
• IT stocks gained, led by Tech Mahindra and Infosys, amid broad sell-off

Benchmark indices fell sharply in early trade on Friday as Brent crude surged above $108 a barrel, with escalating Middle East tensions raising concerns over inflation, economic growth and corporate earnings. A rise in US bond yields and continued caution among investors also added to the pressure.

At 9:38 am, the BSE Sensex was down 622.18 points, or 0.83%, at 74,280.41. The index had opened at 74,309.16. The Nifty 50 declined 217.60 points, or 0.93%, to 23,260.20 after opening at 23,270.30.

Brent crude was trading at $108.62 a barrel, up 0.92%, while WTI crude rose 0.83% to $103.33. Crude prices have surged as the widening Middle East conflict threatens key shipping routes, including the Strait of Hormuz and the Red Sea.

Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday and advanced along the Red Sea coast to strategic islands, according to military sources cited by Reuters. The development has added to concerns over shipping disruptions, while tanker attacks have intensified around the Strait of Hormuz.

Higher crude prices are a major concern for India, the world's third-largest oil importer, as sustained prices above $100 can raise the import bill, increase inflationary pressures and weigh on economic growth and corporate profitability.

"Headwinds for the market are getting stronger with the escalation in the Middle East conflict. Brent crude has shot up to around $108. If this high price sustains, or worse, spikes further, the impact on India’s GDP growth and consequently on corporate earnings will not be insignificant," said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

He added that the rise in US bond yields was another strong headwind, with the 10-year yield approaching the 5% mark, which could act as an inflection point for global equities.

IT STOCKS BUCK THE BROADER TREND

While most sectors traded in the red, IT stocks were among the few pockets of strength. The Nifty IT index rose 0.38%, with Tech Mahindra gaining 1.84%, HCLTech rising 1.23% and Infosys advancing 1.03%.

Bharti Airtel gained 0.56% and ITC rose 0.39%. Adani Ports was marginally higher by 0.07%.

On the other hand, Bajaj Finance was the biggest Sensex loser, falling 2.58%. IndiGo declined 2.29%, M&M fell 2.22%, Tata Steel dropped 1.99%, Axis Bank declined 1.98% and UltraTech Cement fell 1.97%.

L&T fell 1.41%, Kotak Mahindra Bank declined 1.34%, Bajaj Finserv dropped 1.30%, Reliance Industries fell 1.25% and HDFC Bank declined 1.17%.

The sell-off was broad-based, with 15 of the 16 major sectoral indices in the red.

The Nifty Realty index was the biggest sectoral loser, falling 3.84%, followed by Metal, which declined 2.64%. Consumer Durables fell 1.77%, Financial Services Ex-Bank declined 1.73%, Financial Services 25/50 fell 1.40% and MidSmall Financial Services dropped 1.40%.

Auto declined 1.38%, PSU Bank fell 1.14%, Chemicals dropped 1.25% and Healthcare declined 0.79%. Pharma was down 0.78%, while FMCG fell 0.44%, Media declined 0.41% and Oil & Gas fell 0.67%.

Nifty Private Bank declined 0.98%, while MidSmall Healthcare fell 0.91%. Nifty500 Healthcare declined 0.85%.

Nifty MidSmall IT & Telecom, however, gained 0.21%, while the Nifty Financial Services 25/50 index fell 1.40%.

BROADER MARKET UNDER HEAVY PRESSURE

The broader market also saw a sharp sell-off. The Nifty 100 declined 1.01%, Nifty 200 fell 1.10% and Nifty 500 dropped 1.11%.

The Nifty Midcap 50 declined 1.37%, while the Nifty Midcap 100 fell 1.43%. The Nifty Smallcap 100 dropped 1.30%.

India VIX, a gauge of expected market volatility, rose 6.04% to 12.51, reflecting heightened investor nervousness.

Vijayakumar said the booming Indian IPO market was also drawing significant investor money away from the secondary market, adding another layer of pressure.

"All things considered, investors have to be cautious in this challenging environment," he said.

With Brent crude now above $108 and the US 10-year yield nearing 5%, investors are likely to track developments in the Middle East, crude prices and global bond yields closely as the market assesses the impact on India's growth and corporate earnings.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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