Markets Open Lower As Banking Stocks Slide, Brent Crude Tops $90

Indian benchmark indices opened lower on Monday, with banking stocks leading the decline after HDFC Bank's June-quarter earnings disappointed investors, while a sharp rise in crude oil prices amid escalating tensions in West Asia further dampened market sentiment.

At around 9:30 a.m., the Sensex was down 575.67 points, or 0.74%, at 77,575.78, while the Nifty 50 fell 152 points, or 0.62%, to 24,182.30.

Financial stocks were the biggest drag on the benchmarks, with HDFC Bank falling more than 4% despite brokerages maintaining positive ratings after its June-quarter earnings announced over the weekend.

The stock declined 4.29% to ₹784.45 in early trade, while the Nifty Bank index slipped 1.25% as investors reacted to the lender's earnings, particularly weaker-than-expected net interest margin (NIM) performance.

Crude Oil Rally, Geopolitical Risks Weigh

Investor sentiment also remained under pressure after Brent crude futures surged 2.5% to trade above $90 a barrel, their highest level in more than a month. Rising oil prices have renewed concerns over inflation, India's import bill and the outlook for the rupee.

The gains in crude followed escalating geopolitical tensions after the United States carried out strikes on Iran for a ninth consecutive day, raising concerns over potential disruptions to shipping through the Strait of Hormuz, a critical global oil transit route.

Corporate Earnings Offer Support

Despite the weak market opening, early June-quarter earnings have remained encouraging.

According to ACE Equities data, 115 non-BFSI and non-oil & gas companies that have reported results so far recorded 15.6% year-on-year revenue growth, marking the second consecutive quarter of double-digit expansion. Aggregate net profit rose 10.86% year-on-year, although operating margins came under pressure as rising raw material and operating costs lifted total expenditure by 15.8%, the fastest pace in 13 quarters.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the market is currently balancing near-term risks with supportive factors.

He said the biggest concern is Brent crude rising above $90 amid escalating US-Iran tensions, warning that a prolonged rally in oil prices could expose India to an energy shock, weaken the rupee and hurt foreign portfolio investment (FPI) inflows. However, Vijayakumar noted that the continued unwinding of the AI-driven rally in markets such as the US, South Korea and Taiwan could redirect foreign flows towards India.

On the earnings front, he said the June-quarter reporting season has started on a positive note. According to him, Reliance Industries delivered encouraging results, while ICICI Bank reported an excellent all-round performance and Kotak Mahindra Bank also posted strong numbers. However, he said HDFC Bank disappointed the market, particularly on the net interest margin front. He added that a weaker rupee resulting from elevated crude prices could further weigh on foreign investor sentiment.