Sensex, Nifty slip as rising crude prices weigh on markets

Indian equity benchmarks traded lower on Monday as a further rise in crude oil prices, fuelled by geopolitical uncertainty in the Gulf, overshadowed positive global cues and encouraging corporate earnings.

The 30-share BSE Sensex opened marginally lower, falling 19.38 points to 78,479.79. The broader NSE Nifty slipped 5.10 points to 24,567.45 in early trade.

Losses deepened as the session progressed, with the Sensex declining 158.62 points to 78,340.55 and the Nifty falling 45.20 points to 24,524.95.

Eternal, State Bank of India, InterGlobe Aviation, Power Grid, NTPC and Bharti Airtel were among the major laggards in the Sensex pack. Titan and technology companies Infosys, Tech Mahindra and HCL Technologies bucked the trend to trade higher.

The weakness in domestic equities followed another increase in international oil prices. Brent crude, the global benchmark, climbed 1.03 per cent to $84.41 a barrel.

“Elevated crude prices remain a key risk. Brent crude has risen for the third consecutive session to around USD 84.4 a barrel after Iran indicated no immediate reopening of the Strait of Hormuz, while weekend attacks on Gulf shipping have kept the geopolitical risk premium elevated,” Rajesh Palviya, Head of Research at Axis Direct, said.

India is a major importer of crude oil, and sustained price increases can add to inflationary pressures, weaken the rupee and raise the country’s import bill.

Domestic equities nevertheless continued to receive support from better-than-expected corporate results and a return of overseas investment. Foreign institutional investors bought shares worth Rs 480.24 crore on Friday, according to exchange data.

“The undertone of the market is mildly bullish. The principal bullish factor is the better-than-expected Q1 results. With the earnings season coming to an end this week, vast majority of companies have reported earnings growth that has beaten expectations,” VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said.

He added that foreign investors turning buyers in July and continuing to purchase shares on most trading days in August was another positive factor for the market.

Asian markets largely advanced on Monday. South Korea’s KOSPI, Japan’s Nikkei 225, China’s Shanghai Composite and Hong Kong’s Hang Seng traded higher, following a positive close on Wall Street on Friday.

“Asian markets are trading higher in early trade, with Japan's Nikkei 225 and South Korea's Kospi each advancing more than 1 per cent, providing a constructive backdrop for regional equities,” said Ponmudi R, Chief Executive of online trading and wealth technology firm Enrich Money.

The domestic benchmarks had closed lower on Friday. The Sensex fell 455.59 points, or 0.58 per cent, to 78,499.17, while the Nifty declined 65.35 points, or 0.27 per cent, to settle at 24,570.65.

With IANS inputs