Indian stock markets ended sharply lower on Tuesday after giving up early gains as rising crude oil prices, higher global bond yields and rate hike concerns weakened investor sentiment. The BSE Sensex fell 777.94 points, or 1.04%, to close at 74,003.82, while the NSE Nifty dropped 279.50 points, or 1.19%, to 23,118.60.
The Nifty recorded its lowest closing level since April 6, while the Sensex settled at a three-month low. Indian markets opened higher, with the Nifty trading near 23,495 and the Sensex above 75,100, before selling pressure increased later in the session.
Brent crude traded above USD 107 a barrel during the session, keeping investors focused on India's energy import costs. WTI crude also remained above USD 102 a barrel. India imports most of its crude oil needs, making domestic markets sensitive to sharp moves in global energy prices.
Higher oil prices can raise import costs and add pressure to inflation. At the same time, the rupee weakened against the US dollar, making dollar-priced imports more expensive. These factors added to concerns as investors awaited major central bank decisions this week.
Vinod Nair, Head of Research at Geojit Investments Limited, said, “Domestic markets remained under pressure, extending their recent correction as elevated crude oil prices and rising global bond yields weighed on sentiment.”
He also said investors remained cautious because expectations of tighter monetary policy increased. US Treasury yields stayed near multi-year highs as markets assessed the possibility that interest rates could remain elevated for longer.
Bharat Electronics was the biggest loser among Sensex stocks, falling about 6%. InterGlobe Aviation, Titan, Bajaj Finserv, Adani Ports, Mahindra & Mahindra and State Bank of India also closed lower.
Selling spread across several sectors, including banking, automobiles, energy and metals. Earlier in the day, Hindalco Industries, JSW Steel and Eicher Motors were among the stocks facing selling pressure as broader market sentiment weakened.
However, information technology stocks bucked the trend. HCL Technologies rose 3.98%, Infosys gained 3.64%, Tech Mahindra advanced 2.31%, and Tata Consultancy Services climbed 2.18%.
Nair said IT stocks performed better after recent comments about slowing advanced AI development eased some concerns over disruption to traditional technology services.
Asian markets also ended lower. South Korea's Kospi, Japan's Nikkei 225, China's Shanghai Composite and Hong Kong's Hang Seng closed in negative territory. European markets traded lower, while US stocks ended Monday's session with losses.
Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said, “Indian equities suffered a sharp reversal on Tuesday, surrendering their opening gains as Brent crude hovered near USD 107.40 a barrel, US bond yields remained elevated and investors adopted a cautious stance ahead of the Federal Reserve's policy decision.”
Foreign investors also continued to reduce exposure to Indian equities. Foreign Institutional Investors sold shares worth Rs 930.90 crore on Friday, according to exchange data.
The Indian equity market remained closed on Monday for Ganesh Chaturthi. Investors will now track crude oil prices, the Federal Reserve's policy decision, global bond yields, foreign fund flows and geopolitical developments for the next market direction.
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