Indian equity markets displayed a mixed performance in Thursday afternoon trade, with the Nifty 50 managing a modest gain while the Sensex edged lower. The Nifty 50 rose 0.08% to 24,349.30, whereas the BSE Sensex slipped 0.03% to 77,936.80. The divergence was driven by strength in auto stocks, which countered weakness in IT and consumer goods shares.
Brent crude oil prices fell 2% to $99 per barrel, providing significant relief to India, a major oil importer. The decline in energy costs helped ease concerns over inflation and the current account deficit, and also supported the rupee, which strengthened to 94.2525 against the US dollar. The drop in oil prices came amid ongoing diplomatic efforts between Iran and the United States, though negotiations remain unresolved.
Thursday's sideways action followed a strong rally on Wednesday, when the Sensex surged 940.73 points (1.22%) to settle at 77,958.52, and the Nifty climbed 298.15 points (1.24%) to 24,330.95. The earlier advance was also fueled by the decline in oil prices, but traders are now assessing whether the momentum can be sustained.
Auto stocks were the clear leaders on Thursday, with the Nifty Auto index jumping 2.15%. Investors piled into the sector following encouraging earnings reports. Bajaj Auto rose after posting a March-quarter profit that exceeded expectations, while Mahindra & Mahindra extended its gains after its own profit beat. One97 Communications, the parent company of Paytm, also moved higher after reporting a net profit for the March quarter.
In contrast, IT stocks slipped, with the Nifty IT index falling 0.39%. FMCG shares also declined, with the BSE FMCG index down 0.25%. Godrej Consumer Products slipped as analysts flagged margin concerns due to rising input costs. The narrow sectoral participation suggests that the rally remains confined to select pockets.
Foreign portfolio investors continued to withdraw from Indian equities, selling shares worth 58.35 billion rupees on Wednesday, according to the Economic Times. This selling pressure persisted despite the recent uptick in domestic sentiment, as hopes for a resolution to the Iran-US conflict grew. VK Vijayakumar, chief investment strategist at Geojit Investments, described the market mood as "swinging between hope and fear," with West Asia news driving crude price volatility.
Hitesh Tailor, technical research analyst at Choice Equity Broking, described the near-term outlook for domestic markets as "cautiously positive," but cautioned that "intermittent profit booking" could limit further upside if benchmarks encounter resistance. The geopolitical uncertainty remains a key overhang, with Iran still considering a US peace plan that could officially end hostilities. However, Washington's main conditions, including the reopening of the Strait of Hormuz, have not been agreed upon.
Should negotiations falter, crude prices could spike higher, adding fresh strain on India's import bill and weighing on the rupee. A deal would provide some relief, but analysts believe oil prices will remain elevated. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, told Reuters that oil prices are likely to stay high, while Priyanka Sachdeva of Phillip Nova noted that any new attacks or escalation could quickly send prices spiking again.
Overall, Thursday's session reflected a market that is cautiously optimistic but lacking broad-based conviction. The easing of oil prices provided a tailwind for autos and the rupee, but foreign selling and geopolitical risks kept broader indices in check.
