Benchmark indices opened lower on Friday, weighed down by a sharp sell-off in heavyweight financial stocks after the Reserve Bank of India’s draft lending norms rattled investor sentiment, while rising crude oil prices on fresh concerns over shipping through the Strait of Hormuz also kept markets under pressure.
At 9:30 am, the BSE Sensex was down 268.93 points, or 0.34%, at 78,685.83, while the NSE Nifty50 slipped 36.75 points, or 0.15%, to 24,599.25.
The weakness came despite gains in information technology stocks, with the Nifty IT index rising 1.65% after positive stock-specific buying in frontline IT names. However, losses in financial heavyweights more than offset those gains.
The biggest drag on the market came from Bajaj Finance and Bajaj Finserv. Bajaj Finance plunged 4.52%, making it the worst-performing Sensex stock, while Bajaj Finserv fell 3.27% after the RBI proposed draft regulations that investors fear could restrict certain revolving credit products offered by non-bank lenders. The weakness spilled over to the broader financial pack, dragging the Nifty Financial Services index down 0.68% and the Nifty Financial Services Ex-Bank index lower by 1.24%.
Higher crude oil prices also weighed on sentiment. Brent crude rose 1.19% to $83.47 a barrel, while WTI crude gained 0.98% to $78.05, extending gains for a third straight session. Oil prices climbed after Iran, in coordination with Oman, proposed restrictions on vessels considered hostile while transiting through the Strait of Hormuz, reviving concerns over global energy supplies. Since India imports the bulk of its crude oil requirements, higher oil prices are generally seen as negative for inflation and corporate profitability.
Despite the weak start, IT stocks emerged as the day’s bright spot. TCS rose 2.30%, Tech Mahindra gained 2.20%, HCLTech climbed 1.54% and Infosys advanced 0.92%, lifting the Nifty IT index. Mahindra & Mahindra and NTPC also traded firmly higher.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market remains in a consolidation phase and is gradually preparing for a breakout on the upside.
“The market is consolidating and slowly inching up. This trend is likely to continue in the near term, preparing for an eventual breakout on the upside.”
Highlighting the June-quarter earnings season, Vijayakumar said financials, automobiles, pharmaceuticals and telecom companies have largely delivered double-digit revenue and profit growth, lending resilience to their stock prices. However, he noted that IT companies continue to face headwinds from sluggish demand and concerns over the long-term impact of artificial intelligence, while commodities have delivered mixed earnings.
“Going forward, financials, automobiles, telecom and capital goods are likely to maintain the growth momentum. The broader market has delivered superior growth, but elevated valuations will constrain their upward momentum,” he added.
Among Sensex stocks, TCS, Tech Mahindra, HCLTech, Infosys, Mahindra & Mahindra, NTPC and Sun Pharma were the top gainers in early trade. On the other hand, Bajaj Finance, Bajaj Finserv, Trent, ICICI Bank, Bharti Airtel, Eternal, Maruti Suzuki and UltraTech Cement were among the biggest losers.
Sectorally, the picture remained mixed. Apart from Nifty IT, Nifty Auto rose 0.53%, while FMCG, Consumer Durables, Healthcare and Oil & Gas also traded in positive territory. However, Financial Services, Private Bank, PSU Bank, Media, Pharma and Metals were under pressure.
The broader market showed resilience despite weakness in the headline indices. Nifty Midcap 50 gained 0.18%, Nifty Midcap 100 rose 0.13%, while Nifty Midcap IT & Telecom advanced 0.71%. The Nifty Smallcap 100, however, edged down 0.12%. India VIX climbed 2.36%, indicating a rise in market volatility.
Investors will continue to track developments in the Middle East, movements in crude oil prices, RBI’s draft lending regulations and the ongoing June-quarter earnings season for further market direction.
