Indian stock markets witnessed a sharp downturn on Friday afternoon, driven by a surge in global crude oil prices that reignited concerns about inflation and the country's import bill. The BSE Sensex dropped 665.35 points, or 0.85%, to settle at 77,179.17, while the Nifty 50 shed 186.45 points, or 0.77%, to close at 24,140.20 by 2 p.m. IST.
The selloff was triggered after Brent crude oil breached the $100 per barrel mark, following renewed hostilities between the United States and Iran. According to Reuters, this development has heightened fears of supply disruptions, sending shockwaves through energy-sensitive markets like India, which imports over 80% of its crude oil requirements.
The broader market breadth was negative, with 1,939 stocks declining against 1,847 advancing, as per data from Moneycontrol. Out of 16 major sectoral indices, 11 ended in the red. Analysts pointed to the vulnerability of Indian equities to geopolitical risks emanating from the Middle East. "Markets were showing vulnerability to Middle East developments," said Ponmudi R., CEO of Enrich Money.
The Indian rupee also came under pressure, slipping 0.3% to 94.5325 against the U.S. dollar. Earlier in the week, the currency had touched a record low of 95.4325. State-run banks intervened by selling dollars to curb the decline, as reported by Reuters. A weaker rupee adds to the cost of imports, particularly oil, further squeezing corporate margins and consumer wallets.
Banking stocks were among the biggest drags on the indices, with HDFC Bank leading the losses. However, ICICI Bank and Reliance Industries managed to edge higher, indicating selective buying by traders. Coal India and Bajaj Finance were also noted as key laggards on the Nifty by Business Standard.
Foreign portfolio investors (FPIs) remained net sellers, offloading Indian equities worth 340.89 crore rupees on Thursday. In contrast, domestic institutional investors (DIIs) stepped in to provide support, purchasing shares worth 441 crore rupees. The India VIX, a measure of market volatility, surged over 3% to 17.12, reflecting heightened anxiety among traders.
On the earnings front, some companies reported strong quarterly results. Thermax posted a 19% jump in consolidated March-quarter profit to 244 crore rupees, with an order backlog of 13,604 crore rupees. Dabur India's net profit rose 15.75% to 362 crore rupees, while Pidilite Industries saw a 36.63% increase in quarterly profit, according to company filings cited by Upstox.
Britannia Industries took a direct hit from the oil price surge, with its shares falling up to 5%. The packaged-food maker announced price increases for the first quarter, attributing them to sharply higher freight costs linked to the Iran conflict. However, consumer goods consultant Akshay D'Souza told Reuters that these price hikes may not fully offset the impact of rising input costs.
The broader context remains challenging. According to the Financial Times, foreign investors have pulled nearly $21 billion out of Indian equities, with most of the outflow occurring in March, as the energy price spike sent the rupee to all-time lows and bond yields surged. This trend underscores the market's sensitivity to global macro factors rather than just domestic earnings.
Technical analysts see key support levels for the Nifty. Anand James, chief market strategist at Geojit Investments, told Moneycontrol that the index finds support around the 24,180-24,140 range. A breach below that could open the door for a further slide to 23,750-23,540 levels, he added.
