Stock markets opened higher on Friday after three consecutive sessions of losses, with information technology stocks leading the recovery amid a global sell-off in AI-linked shares. However, gains remained limited as crude oil prices climbed above $113 a barrel amid escalating tensions in the Middle East, keeping investors cautious about inflation and India’s economic outlook.
The BSE Sensex was trading at 73,547.36, up 297.97 points or 0.41%, around 9:30 am. The NSE Nifty 50 rose 44.35 points, or 0.20%, to 22,732.
The rebound follows a three-session decline during which the benchmark indices lost around 2%. Investors are weighing improving sentiment towards Indian IT stocks against the risks posed by rising oil prices and continued weakness in the broader market.
IT STOCKS LEAD THE RECOVERY
The Nifty IT index rose 2.04% in early trade, making it the strongest-performing sectoral index in the supplied snapshot. Infosys gained 0.16%, while several other IT stocks supported the sector’s recovery.
The gains came despite weakness in global technology stocks. The Nasdaq Composite fell more than 2% overnight, while Meta shares dropped nearly 8% after the company reported its first cash outflow in more than a decade, linked to AI-related expenditure.
The contrasting performance suggests investors are reassessing opportunities in Indian IT services companies even as concerns about the cost and returns of global AI investments weigh on technology stocks elsewhere.
CRUDE OIL ABOVE $113 LIMITS GAINS
Rising crude oil prices remained a key concern. Brent crude futures climbed to $113.62 a barrel, up 0.40%, while US West Texas Intermediate crude rose 0.56% to $100.03 in the latest snapshot.
The rise comes amid concerns about further energy supply disruptions following Houthi attacks on Saudi Arabia. Higher oil prices are a concern for India, which imports most of its crude requirements, as they can increase the import bill, put pressure on the rupee and add to inflation.
The pressure on oil prices has also raised concerns about corporate margins and the broader economic outlook, limiting the market’s recovery after the recent sell-off.
BROADER MARKET REMAINS WEAK
The gains in benchmark indices were not reflected across the broader market. The Nifty 100 was down 0.05%, the Nifty 200 fell 0.20% and the Nifty 500 declined 0.34%.
Mid- and small-cap stocks continued to face selling pressure. The Nifty Midcap 50 fell 0.84%, the Nifty Midcap 100 declined 0.83% and the Nifty Smallcap 100 dropped 1.25%.
Among sectoral indices, the Nifty Auto index fell 0.59%, the Nifty Metal index declined 1.36% and the Nifty Realty index slipped 1.03%. The Nifty IT index was a notable exception, while the Nifty Pharma index edged up 0.05%.
India VIX, a gauge of expected market volatility, rose 3.86% to 16.37, indicating that caution remained despite the benchmark recovery.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the spike in Brent crude prices towards $114 was a major negative for the economy and markets. However, he pointed to a decline in the US 10-year bond yield to 4.96% and the rupee’s appreciation to 94.70 against the dollar as positives that could help restrain foreign institutional investor selling.
He also highlighted the potential return of money tied up in the Jio Platforms IPO after allotment. Vijayakumar said more than Rs 3 lakh crore of the Rs 3.73 lakh crore that went into the IPO over the previous two days could return to the financial system after allotment is completed by next Monday.
He said the potential liquidity boost could support the market in the coming week, with large-cap stocks likely to lead any recovery. However, he cautioned that the correction in mid- and small-cap stocks could continue because their valuations, driven up by liquidity rather than fundamentals, were difficult to justify.
Investors will track crude oil prices, developments in the Middle East, global technology stocks and foreign fund flows for direction. The return of money tied up in the Jio Platforms IPO could also influence liquidity in the coming week.
For now, the market is showing a split trend: IT stocks are helping the benchmarks recover, while persistent weakness in mid- and small-caps and elevated oil prices continue to cloud sentiment. Whether the rebound can extend will depend on the durability of IT earnings momentum and whether external pressures begin to ease.
