Crude spike rattles market sentiment; Sensex drops 500 pts in early trade, Nifty slips below 24K

Indian equities opened on a subdued note on Tuesday, tracking weakness in global markets, as renewed hostilities in the Strait of Hormuz and a spike in Brent crude to around $113 dampened sentiment. The optimism following the BJP’s historic electoral victory in West Bengal and Assam failed to provide support, with investors remaining cautious amid escalating tensions in the Middle East and volatile crude oil prices.

In the early trade, the BSE Sensex declined as much as 524 points, or 0.67%, to 76,745, as selling pressure in financial heavyweights weighed on the benchmark despite selective buying in IT and telecom stocks. Similarly, the NSE Nifty slipped 170 points, or 0.7%, to touch a low of 23,949.

The broader market remained mixed and range-bound. The Nifty Midcap 100 was largely flat, edging down 0.05%, while the Nifty Smallcap 100 held on to gains, rising 0.23%.

Market volatility, however, ticked higher, with the India VIX rising 2.39% to 18.74. The uptick in the fear gauge signals growing nervousness among investors and points to the possibility of continued choppiness in the near term.

22 out of 30 Sensex stocks in red

The market saw broad-based selling in Sensex heavyweights, with 22 out of 30 stocks floating in negative terrain, led by banking and financial stocks. Bajaj Finance  was the top loser, declining 1.39%, followed by Bajaj Finserv  down 1.27% and Larsen & Toubro  falling 1.26%. ICICI Bank slipped 1.14%, while Sun Pharmaceutical Industries  declined 0.93%.

Among the gainers, Bharti Airtel  emerged as the top performer, rising over 1%, while IT majors Infosys and Tata Consultancy Services , along with index heavyweight Reliance Industries, provided some support to the market.

Sectorally, the trend remained skewed to the downside, with financials leading the losses. The Nifty Private Bank declined 0.56%, while the Nifty Financial Services fell 0.61%. Realty stocks also remained under stress, with the Nifty Realty down 0.54%.

Other laggards included the Nifty Metal and Nifty Pharma, which slipped 0.33% and 0.22%, respectively, pointing to broad-based selling across cyclical and defensive pockets alike.

On the other hand, the Nifty IT, Nifty FMCG and Nifty Consumer Durables traded marginally higher. The Nifty Media outperformed with a gain of over 1%, emerging as the top sectoral gainer in early trade.

Crude spike to dictate near-term market trend

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the sentiment boost from the BJP’s electoral victory in West Bengal is likely to be short-lived, with markets expected to take cues from developments in West Asia, particularly the Strait of Hormuz.

He noted that the resumption of hostilities in the region and Brent crude rising to around $113 pose headwinds for equities. Additionally, the US 10-year bond yield climbing to 4.44% and the rupee weakening to 95.23 against the dollar are unfavourable for foreign portfolio investment (FPI) flows.

In the near term, market direction is likely to be driven by Q4 earnings and management commentary, he added.

Domestic brokerage Motilal Oswal said that multiple state election verdict will be viewed positively by the market, not only for the message of a progressive change but more from the lens of policy continuity as the hands of the ruling NDA have become stronger and any faint memories and concerns of 2024 Lok Sabha setback have been convincingly wiped.

“The results have longer-term implications on the economic growth of involved states, especially the momentous transition for West Bengal, which will play out over the years. Once the results are digested and their positive undercurrent well noted, markets will quickly shift focus to the more immediate developments in the West Asia war and the 4QFY26 earnings season,” it said.

Ponmudi R, CEO of Enrich Money, said that while the outcome of recent state assembly elections and data showing foreign portfolio investors turning net buyers provide some support to markets, the broader sentiment remains cautious. He added that persistent geopolitical uncertainty and global risk aversion continue to weigh on investor confidence, limiting the scope for any sustained upside in the near term.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)