Benchmark stock market indices opened lower on Monday, extending the cautious mood seen last week as the lack of progress towards ending the Iran war kept crude oil prices elevated. Weakness in IT and banking stocks also weighed on the benchmarks.
The BSE Sensex opened at 77,892.92, down 73.04 points from its previous close of 78,009.25. By 9:32 am, the index was down 360.92 points, or 0.46%, at 77,648.33. The Nifty 50 opened at 24,343.45 and was down 81.95 points, or 0.34%, at 24,284.05.
The market remained under pressure even as some pockets of the broader market showed resilience. The Nifty 50 has been trading in a range in recent sessions, with elevated crude prices and geopolitical uncertainty limiting gains.
IT, BANKING STOCKS DRAG
IT stocks were among the biggest drags on the Sensex in early trade. TCS fell 1.57%, Infosys declined 1.54%, HCLTech dropped 1.39% and Tech Mahindra was down 1.21%. The weakness in large IT names weighed on the Nifty IT index, which fell 1.38%.
Banking stocks were also under pressure. SBI fell 1.10%, while Axis Bank declined 0.95%, HDFC Bank lost 0.19%, ICICI Bank fell 0.18% and Kotak Mahindra Bank was down 0.09%. The Nifty PSU Bank index dropped 1.24%, while the Nifty Financial Services 25/50 index declined 0.42%.
Among the Sensex stocks, Tech Mahindra, Infosys, HCLTech, TCS and SBI were among the biggest losers. Tech Mahindra was down 1.21%, Infosys 1.54%, HCLTech 1.39%, TCS 1.57% and SBI 1.10%.
The weakness was not across the board. BEL was up 0.32%, while Titan gained 0.09% among the Sensex constituents. Maruti, Kotak Mahindra Bank, Axis Bank and Reliance Industries were marginally lower.
The Nifty Auto index was one of the few sectoral gainers, rising 0.38%. Nifty Media gained 0.56% and Nifty Pharma rose 0.21%. The Nifty Healthcare index was also up 0.24%.
BROADER MARKET UNDER PRESSURE
The broader market also started weak. The Nifty 100 declined 0.28%, while the Nifty 200 and Nifty 500 fell 0.29% and 0.27%, respectively.
The Nifty Midcap 50 was down 0.31%, while the Nifty Midcap 100 fell 0.36%. The Nifty Smallcap 100 was relatively more resilient, declining 0.14%.
The India VIX, which tracks expected market volatility, rose 1.87% to 11.52.
CRUDE REMAINS THE KEY WORRY
Crude oil remains the main external risk for Indian equities. Brent crude was trading at $88.78 a barrel, up 0.29%, while WTI crude was at $82.35 a barrel.
With no immediate signs of a resolution to the Iran conflict, investors remain concerned that crude could stay elevated. For India, higher oil prices can raise the country’s import bill and add pressure on inflation and corporate costs.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market is likely to remain in the 24,000-24,600 range in the near term until a fresh trigger emerges.
He said crude trading at around $89 a barrel, without any immediate prospect of a resolution to the crisis, is likely to cap any uptrend. He also pointed to the weak performance of large IT and banking stocks as factors weighing on the Nifty.
LOOK BEYOND THE NIFTY 50
Vijayakumar said investors should look beyond the Nifty 50 for short-term gains, with stock-specific action likely to remain strong in the mid- and small-cap segments.
He said the Q1 earnings season showed strong performance from the broader market, and the outperformance of mid- and small-cap stocks could continue through the year.
Within sectors, he pointed to a shift in pharma performance from traditional large pharmaceutical companies towards CDMO, hospitals and diagnostics companies. Discretionary consumption is also outperforming traditional FMCG players, while mid-cap IT is doing better than large-cap IT.
“The important takeaway from the Q1 results season is that earnings recovery is happening, and this has the potential to impart resilience to the market despite the external headwinds like strong crude prices,” Vijayakumar said.
