Sensex, Nifty Flat as Crude Stays Above $100; IT, Auto Stocks Weigh on Markets

Benchmark indices remained largely flat in early trade on Thursday as crude oil prices stayed above $100 a barrel amid heightened tensions in the Middle East.

Weakness in IT, auto and other rate-sensitive stocks kept investors cautious, while markets awaited key US inflation data for further clues on the Federal Reserve’s policy outlook.

At 10:36 am IST, the BSE Sensex was down 10.29 points, or 0.01%, at 74,753.94. The index had opened at 74,742.54. The Nifty 50, meanwhile, was up 1.35 points, or 0.01%, at 23,432.85 after starting the session at 23,446.60.

Brent crude was trading at $101.05 a barrel, while West Texas Intermediate (WTI) stood at $96.12. Oil prices have remained elevated as the Middle East conflict intensifies, raising concerns about inflation, India’s import bill and pressure on corporate earnings.

Iran has claimed responsibility for attacks on 10 ships near the Strait of Hormuz after the US reportedly sank five Iranian oil tankers, adding to concerns over the security of a key global energy route.

Investors are also awaiting US inflation figures, which could influence expectations surrounding the Federal Reserve’s policy decision next week. A sustained rise in oil prices could add to inflationary pressures and make monetary easing more difficult.

“The undertone of markets remains fragile as Brent crossed the $100 per barrel mark amid escalating US-Iran tensions, intensifying concerns over inflation and growth,” said Rajesh Palviya, head of research at Axis Direct.

IT, AUTO STOCKS UNDER PRESSURE

Sectoral weakness was led by IT and automobiles. The Nifty IT index slipped 0.06%, while the Nifty Auto index declined 0.60%.

Among Sensex constituents, HCLTech was the biggest loser, falling 1.19%. M&M declined 0.98%, while IndiGo dropped 0.94%. Maruti slipped 0.48%, Sun Pharma fell 0.44% and Reliance Industries declined 0.42%.

Other notable laggards included Asian Paints, Tata Steel and BEL, which each fell 0.32%, 0.32% and 0.30%, respectively. Adani Ports declined 0.29%, while Trent was down 0.26%.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market’s technical and fundamental picture had weakened after the Nifty slipped below the 23,500 resistance level.

“With Nifty dipping below the 23500 resistance, the market construct has turned weak. Technically the market is vulnerable to further correction, and the fundamental macro trends continue to deteriorate,” Vijayakumar said.

He pointed to Brent crude rising above $101 and the US 10-year Treasury yield climbing to 4.83%. According to him, expectations of a Federal Reserve rate hike this month have also increased, adding to market concerns.

Vijayakumar warned that if crude remains above $100 for an extended period, India’s GDP growth and corporate earnings could come under pressure. Aviation, paints, adhesives, tyres and chemicals are among the sectors likely to be particularly vulnerable to elevated energy costs.

PSU BANKS, MEDIA OUTPERFORM

Despite the broader caution, some sectors traded in positive territory.

The Nifty PSU Bank index gained 0.92%, while the Media index advanced 0.84%. Financial Services 25/50 rose 0.16%, Private Bank gained 0.22% and Oil & Gas increased 0.24%.

Power Grid Corporation was the top Sensex gainer, rising 1.22%. Axis Bank followed with a gain of 1.06%. Tech Mahindra rose 0.84%, SBI advanced 0.72%, Bajaj Finance gained 0.66% and Titan climbed 0.46%.

NTPC rose 0.39%, Bajaj Finserv gained 0.31% and HDFC Bank advanced 0.15%. Infosys was up 0.13%, Bharti Airtel gained 0.12% and ITC edged 0.11% higher.

BROADER MARKET UNDER PRESSURE

The broader market remained weaker than the benchmark indices.

The Nifty 100 fell 0.07%, while the Nifty 200 and Nifty 500 declined 0.13% each. The Nifty Midcap 50 dropped 0.40% and the Nifty Midcap 100 fell 0.35%. The Nifty Smallcap 100 was marginally lower by 0.06%.

India VIX, however, eased 0.71% to 11.84, indicating some moderation in near-term market volatility.

Vijayakumar said defensive segments such as FMCG, pharmaceuticals and healthcare could remain relatively resilient as uncertainty persists. He added that although large private-sector banking stocks remain technically weak, their underlying fundamentals remain strong, making them attractive from a long-term risk-reward perspective.

CRUDE, US INFLATION DATA IN FOCUS

With crude oil prices holding above the $100 mark, investors are likely to closely track developments in the Middle East, movements in global oil prices and the upcoming US inflation data.

The combination of elevated energy prices, rising US bond yields and uncertainty over the Federal Reserve’s next policy move is expected to keep Indian equities cautious in the near term.