Sectoral Watch: Banks, aviation, auto stocks tumble as oil spike sparks broad-based selloff

Renewed hostilities between the US and Iran triggered a broad-based selloff across Dalal Street on Wednesday, with banking, aviation, auto and FMCG stocks bearing the brunt as a spike in crude oil prices stoked concerns over inflation, corporate margins and economic growth.

All major sectoral indices ended in the red, reflecting widespread risk aversion after fears of supply disruptions in the Middle East pushed global crude prices sharply higher.

Banks lead the market lower

Financial stocks emerged as the biggest drag on the market.

The Nifty PSU Bank index dropped 2.7%, while the Nifty Bank and Nifty Private Bank indices declined 2.5% each as investors trimmed exposure to rate-sensitive lenders amid heightened global uncertainty.HDFC Bank fell 2.3%, State Bank of India declined 2%, and ICICI Bank went down 2.4%.

Aviation, auto stocks hit by oil price surge

Oil-sensitive sectors remained under pressure throughout the session as higher crude prices threatened to increase operating costs.

The Nifty Auto index fell 2.2%, with automakers declining on concerns that higher fuel prices could hurt vehicle demand and weigh on margins.Bajaj Auto bucked the trend edging up 0.5% and ending up on the top gainers’ list on Nifty 50.

Aviation stocks witnessed heavy selling as rising aviation turbine fuel (ATF) prices threatened profitability. InterGlobe Aviation, the parent of IndiGo, was among the worst performers on the Nifty50, declining 5% and reflecting investor concerns over higher fuel costs.Spicejet also fell 3%.

FMCG, infrastructure shares also under pressure

Consumer-focused companies also came under pressure, with the Nifty FMCG index falling 2.5% as investors feared sustained inflation could dampen discretionary spending.Hindustan Unilever fell 3.3%, ITC declined 2.8% and Nestle India went down 1.4%.

The Nifty Media index declined 2.3%, while the Infrastructure and Oil & Gas indices each lost around 2%, highlighting the breadth of the selloff across sectors. Oil marketing companies declined with HPCL, BPCL and Indian Oil Corporation logging losses. ONGC bucked the trend on the oil and gas index, ending up as the top gainer on Nifty 50 as investors saw higher oil prices benefiting the upstream company. 

Pharma, metals outperform in weak market

Defensive sectors fared relatively better despite ending lower.

The Nifty Pharma index slipped just 0.97%, making it one of the most resilient pockets of the market, while the Nifty Metal index declined 0.9%.

Among Nifty50 stocks, InterGlobe Aviation, Jio Financial Services, Shriram Finance, Maruti Suzuki India and Hindustan Unilever emerged as the biggest laggards.

In contrast, ONGC ended in the green as investors bet that elevated crude prices would support the company’s realisations. Hindalco Industries, Coal India and Bajaj Auto were among the few other gainers on the benchmark index.

Broader markets witness profit booking

Selling pressure extended beyond frontline stocks, with the Nifty Midcap 100 index falling 1.5% and the Nifty Smallcap 100 index declining 2.2%, indicating broad-based profit booking across the market.

Analysts said investor sentiment is likely to remain sensitive to developments in the Middle East and movements in crude oil prices. The focus will also shift to the June-quarter earnings season, where management commentary on demand, input costs and margins will determine sector-specific trends in the coming weeks.

Source: NSE