Benchmark indices Nifty and Sensex extended their decline to ifth straight session on Monday, as a sharp rise in oil prices weighed on investor sentiment. IT and PSU stocks were the major drags, while pharma and metal stocks edged higher soon after the opening bell.
Sensex dropped over 300 points to trade below 77,700, while 50-share Nifty declined over 50 points to slip below 24,300 level. The broader market represented by Nifty Midcap 150 and Smallcap 100 also opened in the red down 0.3% and 0.15%, respectively.
Major laggards on the Sensex included HUL, Bajaj Finserv, UltraTech Cement, State Bank of India, L&T and NTPC. On the flipside, Eternal, BEL, Axis Bank, and M&M gained marginally.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, expects the market to remain in the 24,000-24,600 range in the near term until fresh triggers emerge to break the range. He said crude oil prices at $89, with no immediate resolution to the crisis in sight, are likely to limit any upside in the market. The Nifty is also being weighed down by the weak performance of major IT and large banking stocks.
Vijayakumar said investors should look beyond the Nifty 50 for short-term opportunities, with considerable stock-specific action likely in the mid- and small-cap segments. He highlighted the broader market's strong performance during the Q1 results season, saying the outperformance of SMIDs is likely to continue through the rest of the year.
According to Vijayakumar, the key takeaway from the Q1 results season is that earnings recovery is underway. This, he said, has the potential to provide resilience to the market despite external headwinds such as elevated crude oil prices.
The S&P 500 slipped 0.2% on Friday to close at 7,785.76, retreating after a record-setting session, but still posted its third straight weekly gain. The Nasdaq Composite fell 0.3% to 26,729.16, while the Dow Jones Industrial Average declined 107.58 points, or 0.2%, to end at 53,732.41.
For the week, the S&P 500 gained 0.4%, while the Nasdaq rose 0.1% for its third consecutive weekly advance. The Dow, however, ended 0.6% lower for the week.
It was a record-setting week for the S&P 500, which crossed 7,800 for the first time on Thursday and hit an intraday record of 7,816.70. The index had also closed at a record in the previous trading session.
Asian shares were largely subdued on Monday as investors remained focused on oil prices, which posted sizeable gains last week amid a lack of progress towards ending the Iran war, keeping inflation risks tilted higher.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat, while Japan's Nikkei gained 0.4%. Australia's resources-heavy benchmark slipped 0.3%.
Investors are also awaiting China's July activity data due on Monday. Forecasts point to industrial output growth slowing to 4.8% from 5.3% previously, while retail sales are expected to have risen 1.5%. The data comes after China's exports benefited from strong global demand for artificial intelligence products and supported the world's second-largest economy.
Foreign investors remained net buyers of Indian equities on Friday, net purchasing shares worth Rs 508 crore. Overall, FIIs closed last week as modest net buyers of Rs 1,228.24 crore, opening with two sessions of buying, reversing into two of selling, and returning as buyers on the final day, Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking said.
DIIs remained consistent buyers, with net purchases recorded in all sessions except the first, committing Rs 9,285.63 crore, he said, noting that Nifty still drifted lower through the week, from 24,584 to 24,366.
“Looking ahead, investors will closely track crude, geopolitical developments, U.S. retail sales, FOMC minutes and Chinese economic data for further cues on global growth and the Fed's policy outlook,” said Vinod Nair, Head of Research at Geojit Investments.
Oil prices gained 1% in early Asian trade on Monday as tanker traffic through the Strait of Hormuz slowed over the weekend, with no peace deal in sight between the United States and Iran to end the conflict in the Middle East.
Brent crude futures rose 60 cents, or 0.7%, to $89, while U.S. West Texas Intermediate crude futures slipped 40 cents to $83 a barrel. Both benchmarks gained more than 5% last week after attacks on tankers operated by Abu Dhabi National Oil Company in the Strait of Hormuz and an attack on a Saudi Aramco refinery.
Over the weekend, Iranian Foreign Minister Abbas Araqchi said Iran had not decided to resume talks with the U.S. Meanwhile, U.S. President Donald Trump called on Americans to accept slightly higher gasoline prices while the conflict continues.
The Indian rupee opened 0.06% lower at 95.4775 against the U.S. dollar on Monday, compared with the previous close of 95.4250.
