Indian equity markets extended their losing streak to a fourth consecutive session on Tuesday, with benchmark indices falling over 1% as the rupee weakened to a historic low and crude oil prices climbed above $106 a barrel. The Nifty 50 ended at 23,470.00, down 345.85 points or 1.45%, while the BSE Sensex slumped 1,241.48 points or 1.63% to 74,783.48. Broader indices also suffered, with the Nifty MidCap declining 1.50% and the Nifty SmallCap losing 2.07%.
The rupee opened at 95.50 against the US dollar and weakened further to 95.6250, surpassing its previous record low. Foreign investors have pulled over $20 billion from Indian equities since the onset of the Iran conflict, with preliminary data indicating overseas selling of nearly $900 million on Monday alone, according to Reuters. The combination of a weak currency and elevated crude prices has heightened macroeconomic risks for India, the world's third-largest oil importer.
Crude Oil and Inflation Concerns
Brent crude futures rose 2.53% to $106.85 a barrel, as traders assessed potential supply disruptions near the Strait of Hormuz. Rising oil costs exacerbate India's trade deficit, fuel inflation, and pressure corporate margins. The market's focus now shifts to India's April consumer price index (CPI) data, due at 4 p.m. IST. A Reuters survey projects inflation to rise to 3.80% from March's 3.40%, moving closer to the Reserve Bank of India's 4% target. The impact of higher oil prices on food costs remains a key concern.
IT Sector Slumps on AI Competition
Technology stocks led the decline, with the Nifty IT index sliding 3.6% to levels not seen since May 2023. Major IT firms including Tata Consultancy Services (TCS), Infosys (INFY), HCL Technologies, and Wipro (WIT) fell between 2.5% and 4%. The selloff was triggered by news that OpenAI launched the OpenAI Deployment Company, a majority-owned AI services venture backed by over $4 billion. Analysts at HSBC noted that India's top IT companies have fallen short in their March-quarter earnings and guidance, warning that global AI investments could divert business from traditional IT services. The sector has declined 25.4% year-to-date, far outpacing the Nifty 50's 9.7% drop.
Energy Stocks Gain on Royalty Cuts
In contrast, energy exploration stocks bucked the broader trend. Oil and Natural Gas Corporation (ONGC) surged 6%, while Oil India gained 6.6%, after CLSA highlighted recent government royalty cuts on crude oil and natural gas output as a significant positive for these companies. Oil Minister Hardeep Singh Puri said India has increased daily domestic LPG output to 54,000 tonnes from around 36,000 tonnes, and holds 60-day reserves for crude and LNG, with 45 days stocked for LPG. However, Puri cautioned that if the energy shock persists, the government may face difficult decisions on fuel pricing. Losses at state-run fuel retailers have reached approximately 100 rupees per litre for diesel and 20 rupees for petrol.
Government Urges Conservation
Prime Minister Narendra Modi over the weekend urged citizens to save fuel, reduce travel, and avoid buying gold, putting discretionary import and travel stocks under renewed scrutiny. Shares of jewellers, oil companies, and travel firms logged a second straight session of declines, according to Reuters.
Market Outlook
Traders are now watching for April CPI data, US inflation figures due Tuesday, crude oil price movements, and foreign fund flows. These factors will help determine whether the current selloff is primarily macro-driven or extends into earnings territory. The Gift Nifty futures for May 26 slipped 0.97%, while USDINR futures were quoted at 95.7700.
