Sensex, Nifty Muted as Oil Offsets IT

New Delhi, Oct 23: Markets were muted on Friday as a rally in IT stocks got countered by Brent crude above $113 a barrel amid rising Middle East tensions.)

Brent crude traded at $113.67 a barrel, its highest level since May, after Saudi Aramco told staff to evacuate its Dhahran headquarters as fighting with Yemen’s Houthis intensified. As a major crude importer, India is exposed to higher inflation when oil climbs.

Sensex and Nifty Figures

The Sensex was trading at 73,291.57 at 9:53 am, up 42.18 points or 0.06 per cent from its previous close of 73,249.39. The Nifty 50 was at 22,642.40 at 9:54 am, down 45.25 points or 0.20 per cent from 22,687.65.

Early Jump Led by IT

Both indices jumped in early trade, with the Nifty 50 opening at 22,742.20 and touching a high of 22,787.25 before slipping below its previous close. IT stocks led the climb. The sector has been rising lately on a rotation out of global AI stocks and a strong earnings season, and investors are anticipating Infosys results today.The Nifty IT index gained 2.39 per cent to 32,846.55, extending a 15.93 per cent rise over the past 30 days. Tata Consultancy Services, Infosys and HCLTech were the top three gainers on the Nifty 50.

Top Gainers and Losers

Tata Consultancy Services (TCS) led the gainers, rising 3.77 per cent to Rs 2,601.30 from its previous close of Rs 2,506.90. Infosys (INFY) gained 2.68 per cent to Rs 1,184.25 from Rs 1,153.35, HCLTech (HCLTECH) rose 2.11 per cent to Rs 1,451.70 from Rs 1,421.70, Reliance Industries (RELIANCE) added 1.07 per cent to Rs 1,197.20 from Rs 1,184.50 and Bharti Airtel (BHARTIARTL) advanced 1.04 per cent to Rs 1,914.70 from Rs 1,895. On the losing side, Hindalco Industries (HINDALCO) fell 1.89 per cent to Rs 868.85 from Rs 885.60, Tata Steel (TATASTEEL) dropped 1.41 per cent to Rs 169.90 from Rs 172.33, Adani Enterprises (ADANIENT) declined 1.29 per cent to Rs 2,517 from Rs 2,550, Tata Motors Passenger Vehicles (TMPV) lost 1.20 per cent to Rs 266.75 from Rs 270 and Titan Company (TITAN) slipped 1.09 per cent to Rs 4,302.40 from Rs 4,350.

Broad Markets and Sectoral Indices

Broader markets were weak, with the Nifty Next 50 down 1.11 per cent at 66,603.55, and no broad-based index other than the Nifty 50 was in the green. The Nifty Microcap 250 fell 1.86 per cent to 23,939.65, the Nifty Smallcap 500 lost 1.53 per cent to 19,013.85 and the Nifty Smallcap 100 declined 1.47 per cent to 18,007.15. Among sectoral indices, the Nifty IT rose 2.39 per cent to 32,846.55, followed by the Nifty Services Sector, up 0.65 per cent at 30,191.85, and the Nifty Midsmall IT & Telecom, up 0.61 per cent at 10,102.55. The Nifty Metal led the decliners, down 1.56 per cent at 11,614.85, followed by the Nifty Realty, down 1.30 per cent at 793, and the Nifty Media, down 1.21 per cent at 1,565.40.

Middle East Conflict

Iran’s Islamic Revolutionary Guard Corps Navy said four vessels involved in illegal oil transfers in the northern Persian Gulf were hit and caught fire, while three more vessels collided with mines west of the Strait of Hormuz, and it warned the US of a wider response against its regional bases. Saudi Aramco told staff on Thursday to evacuate its Dhahran headquarters, six sources told Reuters, and Saudi Arabia’s benchmark TASI index dropped 2.5 per cent on Thursday. The Houthis said they targeted Aramco facilities in Yanbu and the Saudi defence ministry in Riyadh, claims Saudi authorities did not confirm, while a Houthi attack on King Fahd International Airport in Dammam killed two people, including an Indian national. The renewed fighting has ended a 2022 UN-brokered truce and opened another front in the US-Israeli war on Iran, and the US has ordered some diplomats and their families to leave its missions in Saudi Arabia.

Pressure Beyond IT

The rally was narrow. The Nifty Metal, Nifty Realty and Nifty Media indices fell more than 1 per cent, the Nifty Midcap 100 declined 0.89 per cent and the Nifty Smallcap 100 lost 1.47 per cent. India VIX rose 3.25 per cent to 16.28, a sign that investors remain cautious.

Why IT Stocks Are Rising

• Rotation out of global AI stocks: Earlier this month, analysts said weakness in global AI stocks could ease some competitive pressure on traditional IT services companies. That would explain why money flows into Indian IT while the Nasdaq and Asian tech shares fall.
• A strong earnings run: HCLTech’s July-September results lifted sector sentiment, with advanced AI revenue up 78 per cent year-on-year to $219 million. The mid-October rallies were also tied to improving sentiment around AI services and a weaker rupee against the US dollar, which generally helps IT exporters. The rupee was quoted at 94.79 per dollar this morning.
• Infosys results today: Infosys is among the companies releasing Q2 FY27 results today. Investors positioning ahead of the numbers may be adding to the momentum.

Asian Markets

Asian stocks extended losses on Friday morning amid a continued sell-off in technology and AI shares, rising oil prices and caution ahead of central bank decisions. The Kospi fell 2.63 per cent to 5,388.02, the Nikkei 225 dropped 1.9 per cent to 61,714.82, Taiwan’s index lost 1.81 per cent to 46,041.43, the Shanghai Composite declined 1.75 per cent to 3,594.18 and Hong Kong’s Hang Seng slipped 0.53 per cent to 22,813.47, while Australia’s ASX 200 fell 0.43 per cent. Expectations of a hawkish stance or a possible rate hike from the Bank of Japan, alongside steady rate outlooks elsewhere, added to the pressure on equities.

US Markets

Wall Street ended mixed on Thursday as technology shares sank, with the Nasdaq Composite down 2.6 per cent at 26,008.86 and the S&P 500 down 1.21 per cent at 7,663.43. The Dow Jones Industrial Average edged up 0.02 per cent to 52,867.98, while the NYSE Composite added 0.09 per cent and the Nasdaq 100 fell 2.9 per cent to 28,958.69. The VIX volatility index jumped 14.09 per cent to 19.03, while utilities rose 2.19 per cent and transports gained 1.87 per cent.

Oil Prices

Brent crude was trading at $113.67 a barrel, up $0.50 or 0.44 per cent, while WTI crude was at $100.04, up 0.60 per cent. Murban crude rose 3.81 per cent to $114.39, while the OPEC basket was at $111.29. Brent had jumped nearly 4 per cent to top $113, its highest level since May, after reports that the US and Israel have drawn up plans for potential renewed strikes on Iran after the November midterm elections, according to NBC News. Higher energy costs immediately stoked fresh inflation and interest rate concerns, a worry for India as a major crude importer.

Thursday’s Close

The Nifty 50 and the Sensex fell for a third straight session on Thursday as surging crude prices and escalating Middle East tension heightened inflation concerns. The Sensex fell 460.30 points, or 0.62 per cent, to settle at 73,249.39, while the Nifty 50 declined 123.70 points, or 0.54 per cent, to close at 22,687.65, below the 22,700 mark. Market breadth was negative, with 2,670 stocks declining, 1,323 advancing and 155 unchanged, while losses in midcap and smallcap shares reflected broad-based selling. Weakness in IT, FMCG and energy stocks weighed on the benchmarks, even as crude climbed to around $112 per barrel.

Sources:

• NSE
• BSE
• Reuters
• CNBC
• NBC News
• OilPrice.com
• PTI