Benchmark indices opened higher on Thursday, helped by a decline in crude oil prices and a positive global market mood after Nvidia reported stronger-than-expected quarterly results. However, the gains remained fragile as geopolitical tensions and elevated US bond yields continued to weigh on investor sentiment.
The BSE Sensex opened at 77,576.76, up 103.82 points or 0.13% from the previous close of 77,472.94. The index later pared gains, trading at 77,435.21, down 37.73 points or 0.05%, at 9:42 am. The Nifty 50 opened at 24,277.60, gaining 69.85 points or 0.29%, before slipping to 24,208.30, almost flat, at the same time.
Oil prices eased after Iran said it was working with Oman to finalise details of an agreement concerning the Strait of Hormuz, raising hopes that the key waterway could reopen and easing concerns over prolonged disruptions to Middle East oil supplies. Brent crude was around $87.44 a barrel, down 0.46%, while WTI crude fell 0.47% to $81.84.
Nvidia’s strong earnings also lifted sentiment across Asian technology stocks. The chipmaker reported quarterly revenue that more than doubled and forecast third-quarter revenue above Wall Street expectations, providing a boost to the global technology sector.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said geopolitical tensions remain a key risk for equities, with both the US-Iran situation and renewed escalation in the Russia-Ukraine conflict weighing on markets.
“Geopolitical tensions continue to weigh on markets. Apart from the U.S.-Iran tensions, there are reports of renewed escalation in the Russia-Ukraine conflict. Wheat prices have shot up and this will have implications for inflation and eventually on interest rates,” Vijayakumar said.
He added that although US bond yields have softened somewhat, they remain elevated and are likely to restrict a sharp market rally.
Vijayakumar also pointed to the growing divergence between the benchmark Nifty and the broader market. “The dichotomous nature of the market trend – the midcap index at record highs while the Nifty is languishing about 8% below its peak – is likely to persist in the near-term since money flows and momentum support this SMIDs rally,” he said.
However, he cautioned that the divergence may not be sustainable as valuations in the mid- and small-cap segments become stretched. “Investors should look for stocks with good growth prospects but reasonable valuations. This combination is very rare,” he said.
The broader market remained relatively firm. Nifty Midcap 50 was up 0.21%, while Nifty Midcap 100 gained 0.23%. Nifty Smallcap 100 added 0.07%. Nifty 100 was marginally lower, while Nifty 200 and Nifty 500 edged higher. India VIX rose 2.53% to 10.83, signalling some increase in market volatility.
Among sectoral indices, Nifty PSU Bank gained 0.18%, Nifty Private Bank rose 0.28%, Nifty Metal added 0.20% and Nifty Pharma advanced 0.23%. Nifty Realty climbed 0.33%, while Nifty Healthcare gained 0.23% and Nifty Consumer Durables rose 0.60%.
On the other hand, Nifty Auto fell 0.38%, Nifty FMCG declined 0.17% and Nifty Oil & Gas slipped 0.08%. Nifty Financial Services 25/50 was down 0.10%, while Nifty IT was almost flat.
Among Sensex stocks, Kotak Mahindra Bank, BEL and Tech Mahindra were among the top gainers, while HCLTech, Infosys, Bharti Airtel, Power Grid and NTPC were among the notable laggards. Eternal, which gained 0.08%, was also marginally higher.
The broader market was supported by expectations of lower crude prices, but investors remained cautious as geopolitical risks, inflation concerns and high bond yields continued to limit the scope for a sustained rally.
