Indian equities slipped on Thursday as Brent crude stayed above $110 a barrel, raising inflation concerns and pressuring oil-sensitive sectors, while expectations of further rate hikes also weighed on sentiment.
Mumbai, October 22 — Indian benchmark indices fell in early trade on Thursday as high crude oil prices and inflation concerns kept investors cautious.
The Nifty 50 dropped 0.73% to 22,647.90, while the Sensex fell 0.49% to 73,343.98 as of 9:50 am IST. Fifteen of the 16 major sectoral indices were trading lower.
Broader markets also came under pressure, with both mid-cap and small-cap indices falling around 1.2%.
The main concern was the sharp rise in global oil prices.
Brent crude futures climbed 1.7% to around $110.70 per barrel, as escalating Middle East tensions raised concerns about energy supplies.
Higher crude prices are particularly negative for India because the country imports most of its oil requirements.
A sustained rise in oil prices can increase the import bill, push up inflation, pressure the rupee and hurt corporate margins in sectors that use petroleum products as key inputs.
Investors were also assessing signals from the Reserve Bank of India’s rate-setting panel.
Minutes from the latest monetary policy meeting showed that some members believed further interest-rate increases could be required to control inflation, although policymakers stopped short of supporting an aggressive tightening cycle.
Choice Broking technical research analyst Deepesh Sarawagi said global weakness and persistent concerns over inflation and interest rates were keeping traders defensive.
He added that upcoming corporate earnings would be important in determining whether the Nifty finds support at lower levels or extends its recent decline.
Among heavyweight stocks, HDFC Bank fell 1.6%, while Reliance Industries declined 1%.
Oil-marketing companies, paint makers and tyre manufacturers also came under pressure because higher crude prices can increase raw-material and operating costs.
Mahindra & Mahindra Financial Services dropped around 6%, with brokerages highlighting concerns over rising funding costs and possible risks linked to insurance distribution reforms.
Consumer stocks were also weak.
Nestle India fell 3%, while Abbott India and Zydus Wellness declined after the Food Safety and Standards Authority of India issued notices over promotional claims linked to some products.
The market decline extended losses from the previous two sessions, with investors closely watching oil prices, inflation, interest rates and corporate earnings for near-term direction.
