Auto, IT and Banks End in Red as Pharma, Metals Offer Safe Haven from Middle East

Mumbai, June 29: Sectoral indices ended largely in the red on Monday as a rebound in crude oil prices and renewed geopolitical tensions in the Middle East prompted investors to pare exposure to economically sensitive sectors. Auto, banking, IT and oil & gas stocks bore the brunt of the selling, while pharmaceutical, healthcare and metal counters bucked the trend on defensive buying. 

The Nifty Auto index was the biggest sectoral loser, tumbling 2%, while the Nifty PSU Bank, IT, Media and Oil & Gas indices each declined around 1%. In contrast, the Nifty Pharma, Healthcare and Metal indices advanced about 1% each, cushioning the benchmark indices from steeper losses. 

The sectoral churn came as investors weighed fresh hostilities in the Middle East, which lifted crude oil prices after last week’s sharp correction. Brent crude topped $72 a barrel, showing an uptrend and reviving concerns over input costs and inflation, particularly for fuel-intensive sectors. Meanwhile, a weaker-than-normal start to the southwest monsoon also dented sentiment toward rural demand-linked stocks. 

Autos skid as higher oil clouds demand outlook 

Nifty Auto slid on oil as investors worried volatility in energy markets may impact demand. Source: NSE  

Auto stocks led the market lower, with the Nifty Auto index shedding 2%. Mahindra & Mahindra, Maruti Suzuki India, Tata Motors Passenger Vehicles, Hero MotoCorp, TVS Motor Company, Bajaj Auto and Eicher Motors all ended in the red as investors worried that higher fuel prices could hurt vehicle demand and increase ownership costs. 

InterGlobe Aviation (IndiGo) also featured among the benchmark’s top losers, as the rise in crude prices threatened to push up aviation turbine fuel (ATF) costs after airlines had benefited from last week’s decline in oil prices. 

Banks, IT remain under pressure 

Nifty Financial Services dropped but HDFC Bank bucked the trend. Source: NSE 

Financial stocks also witnessed broad-based selling, dragging the frontline indices lower. Kotak Mahindra Bank emerged as the biggest Nifty loser after announcing that Managing Director and CEO Ashok Vaswani would not seek reappointment when his current term ends in December 2026.  

Private lenders Axis Bank and IndusInd Bank also traded lower. HDFC Bank bucked the trend, gaining after an independent legal review commissioned by the bank found no evidence to support governance concerns raised by former Chairman Atanu Chakraborty in his resignation letter. The development is seen as clearing a key overhang on the stock and paves the way for the board to begin the process of seeking regulatory approval for CEO Sashidhar Jagdishan’s reappointment.  

Public sector lenders such as State Bank of India, Punjab National Bank and Bank of Baroda weighed on the Nifty PSU Bank index. 

The Nifty IT index declined 1.1%, weighed down by an 11.2% plunge in Persistent Systems after investor sentiment turned cautious over the company’s acquisition of Munich-based digital engineering firm Nagarro SE. Technology stocks also extended their recent weakness as outlook remained cautious for discretionary technology spending, with Infosys, Tech Mahindra, and LTIMindtree ending lower. 

Nifty IT continued its decline as Persistent Systems pummelled tech stocks. Source: NSE 

Oil & gas counters, including Reliance Industries, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC), also came under pressure as higher crude prices threatened to squeeze refining and marketing margins. 

Pharma, healthcare attract defensive buying 

Defensive sectors emerged as the day’s bright spots, with investors rotating into pharmaceutical and healthcare stocks. 

Dr Reddy’s Laboratories climbed sharply after investors welcomed the outcome of a recent inspection by the US Food and Drug Administration (USFDA) at its biologics facility in Bachupally, Hyderabad. The regulator issued seven observations, which analysts viewed as manageable. 

The gains spread across the sector, lifting Sun Pharmaceutical Industries, Cipla, Lupin. In healthcare, Max Healthcare Institute and Apollo Hospitals Enterprise also attracted buying interest. 

The Nifty Pharma and Healthcare indices rose around 1%, as investors sought the relative earnings stability typically offered by the sector during periods of heightened uncertainty. 

Metals buck the trend 

Metal stocks also outperformed despite the weak broader market. Coal India featured among the top Nifty gainers, while Tata Steel, JSW Steel, Hindalco Industries, Jindal Steel and NMDC also traded with a positive bias, helping the Nifty Metal index end 0.8% higher. 

Broader markets also retreat 

Selling pressure extended to the broader market, with the Nifty Midcap 100 slipping 0.4% and the Nifty Smallcap 100falling 0.6% as investors booked profits following recent gains. 

Going forward, traders are expected to keep a close watch on crude oil prices, developments in the Middle East, the progress of the southwest monsoon and foreign institutional investor (FII) flows. While diplomatic efforts between the U.S. and Iran have eased fears of a wider regional conflict, volatility in energy markets is likely to keep sector rotation in focus over the coming sessions. 

Source

• NSE