IT Meltdown, Oil Shock Bruise Markets; Media, Pharma and Private Banks Buck the Trend

Mumbai, June 11: Sectoral performance on Dalal Street was sharply divided on Thursday, with investors dumping technology and crude-sensitive stocks amid a fresh spike in oil prices and concerns over a prolonged high-interest-rate environment in the United States. While defensive sectors such as pharmaceuticals and private banks attracted buying interest, the broader market remained under pressure as escalating tensions in the Middle East and rising inflation worries weighed on risk appetite. 

The Nifty IT index emerged as the biggest sectoral loser, falling 1.6%, while Realty, PSU Bank, Energy and Consumer Durables indices also ended in the red. On the other hand, Media surged nearly 2%, while Pharma and Private Banks gained between 0.5% and 0.6%, helping limit losses in the benchmark indices. 

IT Stocks Bear the Brunt of AI Anxiety 

Technology stocks remained at the centre of the selloff as investors continued to grapple with the implications of artificial intelligence for India’s $300-billion-plus IT services industry. 

Infosys and HCL Technologies were among the top losers on the Nifty 50, while Wipro, Tech Mahindra, LTIMindtree, Persistent Systems, Mphasis and Coforge also witnessed broad-based selling. Infosys share price fell 2.7% while HCL Technologies declined 1.9%.  

Nifty IT bled 1.6% as AI came to haunt the stocks again. Source: NSE 

Sentiment in the sector has deteriorated in recent sessions after concerns emerged that rapid advances in AI could reduce demand for traditional labour-intensive outsourcing services. 

Investors are increasingly questioning whether automation and AI agents could alter the industry’s long-established business model, which relies heavily on large workforces for software development, maintenance and support services. The concerns intensified after comments from industry leaders suggested AI deployment could accelerate significantly over the coming years. 

Tata Consultancy Services (TCS), however, managed to pare losses after announcing a strategic partnership with Anthropic to help enterprises scale AI adoption and train thousands of employees on AI tools. The development helped the stock outperform several of its peers, even though it still ended lower 0.8%. 

Oil Rally Hammers Crude-Sensitive Sectors 

A fresh surge in crude oil prices added another layer of pressure on the market. 

Brent crude climbed towards $95 per barrel after Iran announced the closure of the Strait of Hormuz following fresh U.S. military strikes, raising fears of disruptions to global energy supplies. The development reignited concerns about inflation and higher operating costs across multiple sectors. 

Oil marketing companies were among the hardest hit. HPCL, BPCL and Indian Oil Corporation declined as investors questioned whether recent fuel price hikes would be sufficient to offset rising crude procurement costs. HPCL share price fell over 2% as the market remains wary that sustained strength in oil prices could squeeze refining and marketing margins. 

The pressure extended to aviation stocks, with SpiceJet and InterGlobe Aviation (IndiGo) trading lower amid fears of rising aviation turbine fuel costs. SpiceJet share price fell over 4%. Paint manufacturers such as Asian Paints and Berger Paints also came under pressure as crude-linked raw materials account for a significant portion of their input costs. 

Chemical companies and other energy-intensive businesses similarly witnessed selling as investors factored in the possibility of margin compression if crude prices remain elevated. 

Private Banks Offer Stability 

Private sector lenders emerged as one of the market’s few areas of strength. 

Nifty Bank edged up all thanks to heavyweight private lenders extending their support. Source: NSE 

The Nifty Private Bank index gained around 0.5%, supported by buying in ICICI Bank and Kotak Mahindra Bank. Investors appeared to favour high-quality financials amid growing uncertainty in global markets, viewing them as relatively insulated from the immediate impact of rising oil prices and AI-related concerns. 

The resilience in banking stocks also helped cushion losses in the benchmark indices, preventing a sharper decline in the Sensex and Nifty. 

Pharma Attracts Defensive Flows 

Healthcare shares benefited from a shift towards defensive sectors. 

The Nifty Pharma index rose around 0.6%, with Sun Pharmaceutical Industries emerging among the top gainers on the Nifty 50. Investors often rotate into pharmaceutical stocks during periods of heightened geopolitical and macroeconomic uncertainty due to the sector’s relatively stable earnings profile and lower sensitivity to economic cycles. 

The buying interest reflected a broader move towards defensive positioning as investors sought refuge from volatility in technology and cyclical sectors. 

Media Steals the Show 

Media was the standout performer of the day, with the Nifty Media index rising nearly 2%. 

The rally was led by Zee Entertainment Enterprises, which surged after approving plans to raise at least ₹2,300 crore through one or more fundraising rounds. Investor sentiment was further boosted by the broadcaster’s recent acquisition of media rights for multiple FIFA tournaments through 2034, including future FIFA World Cups. 

Market participants viewed the combination of fresh capital and premium sports content as a significant positive for Zee’s long-term growth prospects, helping lift sentiment across the broader media pack. 

Broader Markets Remain Under Pressure 

The weakness was not confined to frontline indices. The Nifty Midcap 100 and Nifty Smallcap 100 indices fell 0.8% and 0.7%, respectively, indicating that risk aversion extended across the broader market. 

Nifty Midcap 100 crashed as investors dumped riskier assets amid flare-ups in the Middle East. Source: NSE 

Realty stocks weakened amid concerns that higher global interest rates could dampen liquidity and borrowing demand, while PSU banks and consumer durable companies also witnessed selling pressure. 

Foreign investor sentiment remained fragile after U.S. consumer inflation accelerated at its fastest pace in three years in May, reinforcing expectations that the Federal Reserve could keep interest rates elevated for longer. Higher U.S. rates tend to reduce the attractiveness of emerging-market assets and raise the risk of capital outflows from markets such as India. 

With oil prices hovering near multi-month highs, geopolitical tensions escalating and AI-related concerns continuing to weigh on technology stocks, investors are likely to remain selective, favouring defensive sectors while avoiding areas most exposed to rising costs and global uncertainty. 

Source

• NSE