Sensex Falls 388 Points As Oil Rally, Inflation Concerns Weigh On Markets

Indian benchmark indices ended lower on Tuesday as a sharp rebound in crude oil prices and rising inflation concerns prompted investors to trim risk ahead of key inflation data from India and the US.

The BSE Sensex declined 388.19 points, or 0.49%, to close at 78,154.25, while the NSE Nifty 50 fell 112.10 points, or 0.46%, to settle at 24,471.70.

Market breadth remained mixed, with 1,977 stocks advancing, 2,152 declining and 187 remaining unchanged on the NSE.

Oil Rally Weighs On Sentiment

The rally in crude oil shifted investor focus back to inflation risks, overshadowing an otherwise supportive corporate earnings season.

Vinod Nair, Head of Research at Geojit Investments, said higher oil prices and geopolitical uncertainty kept investors cautious.

"A sharp rebound in crude prices shifted market attention back to inflation risks, tempering investor enthusiasm despite a supportive earnings backdrop. Concerns over the disruptions in the Strait of Hormuz and the US-Iran negotiations kept sentiment guarded, particularly ahead of key inflation prints in India and the US. The resulting risk-off sentiment weighed on sectors most vulnerable to higher energy costs, while pharma and select IT names emerged as relative gainers. Nevertheless, robust foreign inflows and encouraging corporate earnings are limiting the downside risk," he said.

Among Nifty constituents, Tata Consumer Products, Max Healthcare, UltraTech Cement, Apollo Hospitals and Nestle India were the top losers, while Dr Reddy's Laboratories, Eternal, Tata Consultancy Services, Titan Company and Infosys emerged as the leading gainers.

Pharma, IT Buck Broader Weakness

Sectoral performance remained mixed. Nifty Pharma gained 1%, while Nifty IT advanced 0.6%.

On the downside, Nifty Realty, FMCG and Metal each declined around 1%. Nifty Infrastructure slipped 0.8%, while Nifty Private Bank, Auto and Bank indices fell between 0.4% and 0.6%.

The Nifty Midcap 100 index ended largely unchanged, while the Nifty Smallcap 100 rose 0.2%.

The Indian rupee weakened by 15 paise to close at 95.44 against the US dollar.

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said the currency remained under pressure due to rising crude prices and a stronger US dollar.

"Rupee traded weaker, declining around 15 paise to 95.43, as the recent rally in crude oil prices put pressure on the domestic currency. Brent crude moved higher towards $90 per barrel, raising concerns over India's import bill and limiting the rupee's recovery. Meanwhile, the US Dollar Index rebounded after taking support near 99.50, adding further pressure on the rupee. Going forward, the currency will take cues from crude oil, the Dollar Index and FII flows, with US inflation data also likely to influence the dollar. Technically, the rupee range is seen between 95.25-95.75 in the near term."