Indian stock markets experienced a downturn in early trade, primarily driven by a significant spike in crude oil prices fuelled by ongoing geopolitical uncertainties, even as global markets showed mixed signals.
Key Points
- Indian benchmark indices, Sensex and Nifty, saw early declines influenced by a surge in crude oil prices.
- Brent crude rose over 1 per cent to $84.41 per barrel, primarily due to Iran's stance on the Strait of Hormuz and recent attacks on Gulf shipping.
- Despite the market dip, analysts note a mildly bullish undertone, supported by better-than-expected Q1 earnings and sustained buying by Foreign Institutional Investors (FIIs).
- FIIs continued their buying trend, acquiring equities worth Rs 480.24 crore on Friday, indicating confidence in the Indian market.
- Asian markets, including Japan's Nikkei 225 and South Korea's Kospi, traded higher, providing a mixed global backdrop for Indian equities.
Market benchmark indices Sensex and Nifty drifted lower in early trade on Monday amid a spike in crude oil prices due to geopolitical uncertainties.
The 30-share BSE Sensex dipped 19.38 points to 78,479.79 in early deals. The 50-share NSE Nifty skidded 5.10 points to 24,567.45.
Later in the trade, the BSE benchmark declined 158.62 points to 78,340.55, and the Nifty edged lower by 45.20 points to 24,524.95.
Winners and Losers on Dalal Street
From the Sensex pack, Eternal, State Bank of India, InterGlobe Aviation, Power Grid, NTPC and Bharti Airtel were among the laggards.
Titan, Infosys, Tech Mahindra and HCL Tech were among the winners.
Crude Oil Concerns and Geopolitical Risks
Brent crude, the global oil benchmark, traded 1.03 per cent higher at $84.41 per barrel.
"Elevated crude prices remain a key risk. Brent crude has risen for the third consecutive session to around $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, Axis Direct, said.
FII Activity and Market Sentiment
Foreign Institutional Investors (FIIs) bought equities worth Rs 480.24 crore on Friday, according to exchange data.
FIIs turning buyers in July and continuing their buying in most of the days in August, so far, is another positive factor, he added.
Global Market Overview
In Asian markets, South Korea's KOSPI, Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index quoted higher.
US markets ended in positive territory on Friday.
What Experts Say
"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, Geojit Investments Limited, said.
"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," Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.
