Sensex, Nifty end lower as IT stocks wipe out gains despite lower crude

The Sensex closed 329.91 points, or 0.44%, lower at 74,529.08, while the Nifty 50 declined 85.30 points, or 0.36%, to 23,329.00. The Sensex had opened at 74,901.50, while the Nifty opened at 23,454.05.

In Short

• Brent crude slipped below $100, easing inflation concerns
• NSE's weekly derivatives expiry added to market volatility
• Nifty 100 and broader indices ended marginally lower

Benchmark indices reversed early gains to close lower on Tuesday as selling in IT stocks offset relief from falling crude oil prices and positive global cues. Investors also remained cautious ahead of potential US-Iran diplomatic talks at the UN General Assembly this week.

The Sensex closed 329.91 points, or 0.44%, lower at 74,529.08, while the Nifty 50 declined 85.30 points, or 0.36%, to 23,329.00. The Sensex had opened at 74,901.50, while the Nifty opened at 23,454.05.

The indices had started the session higher, but gains faded as the day progressed, with IT stocks coming under pressure on concerns around demand and earnings. The market was also trading on the day of the NSE's weekly derivatives expiry.

IT STOCKS DRAG MARKET

IT stocks were among the biggest drags on the benchmarks. The Nifty IT index fell 0.86%, with major IT stocks ending lower.

Tech Mahindra fell 1.02%, Infosys declined 0.98%, TCS dropped 1.13% and HCLTech fell 0.80%.

The selling came after CLSA and Goldman Sachs flagged subdued demand concerns weighing on the medium-term earnings outlook for the sector.

Among other major Sensex losers, Bajaj Finserv fell 1.62%, Trent declined 1.47%, Bajaj Finance dropped 1.46% and Sun Pharma fell 1.28%.

SBI fell 0.99%, Larsen & Toubro dropped 0.93% and ITC declined 0.82%.

CRUDE FALLS BELOW $100

Crude oil prices provided some relief to the market but were not enough to prevent the benchmarks from closing lower.

Brent crude fell 1.5% to around $98.9 a barrel, moving below the key $100 level. It had earlier risen around 2% during the session before reversing gains.

The decline came after a report by Japanese news agency Kyodo said Iran had offered to reopen the Strait of Hormuz within seven days if the US eases military pressure, raising hopes of a diplomatic path forward.

The market is closely tracking crude prices because a sustained decline could ease concerns around inflation, bond yields and corporate earnings.

Vinod Nair, Head of Research, Geojit Investments Limited, said, "The continued decline in crude oil prices, with Brent slipping below the key $100/bbl level, provided some relief to investors and helped the domestic market recover from intraday lows, although overall sentiment remained cautious."

He added that expectations of renewed diplomatic efforts surrounding the Iran conflict and prospects of improved Saudi oil shipments had eased concerns over inflationary pressures, while positive global cues also supported the market.

The broader market remained under pressure, although the decline was less severe in some segments.

The Nifty 100 fell 0.37%, while the Nifty 200 declined 0.31% and the Nifty 500 lost 0.29%.

The Nifty Midcap 50 fell 0.01%, while the Nifty Midcap 100 declined 0.08%. The Nifty Smallcap 100 was down 0.23%.

India VIX, the market's volatility gauge, fell 2.88% to 10.92.

Most sectoral indices ended lower on Tuesday, with IT among the biggest drags.

Nifty IT fell 0.86%, while consumer durables declined 0.64% and FMCG dropped 0.53%. Nifty Pharma fell 0.41%, PSU Bank declined 0.49% and Private Bank lost 0.31%.

Financial Services 25/50 fell 0.38%, Auto declined 0.24% and Oil & Gas dropped 0.43%. Healthcare fell 0.46%, while Nifty 500 Healthcare declined 0.54%.

There were some pockets of strength. Nifty Media rose 1.21%, Realty gained 0.90%, Chemicals advanced 0.43% and Metal rose 0.14%. MidSmall Financial Services also gained 0.25%.

Eternal was the top Sensex gainer, rising 1.94%, while IndiGo gained 1.58%.

Titan rose 0.72%, Tata Steel gained 0.60%, NTPC advanced 0.15% and Maruti Suzuki rose 0.15%. Adani Ports also ended 0.12% higher.

On the losing side, Bajaj Finserv was the biggest decliner, falling 1.62%, followed by Trent at 1.47% and Bajaj Finance at 1.46%.

Sun Pharma, TCS, SBI, Infosys, Larsen & Toubro and ITC were among the other major losers.

WEEKLY EXPIRY, DERIVATIVES RULES IN FOCUS

Tuesday's session also marked the NSE's weekly derivatives expiry.

Market participants have been watching the regulator's proposals to overhaul the derivatives settlement framework. According to the market commentary provided, most participants expect the proposed changes to help curb expiry-day volatility.

The expiry added another layer of activity to a market already dealing with geopolitical uncertainty, changing crude prices and concerns over global interest rates.

Nair said sectoral performance remained mixed, reflecting selective risk appetite among investors.

"With crude prices witnessing a sharp correction in recent weeks, market participants are increasingly focused on the sustainability of this trend given its implications for inflation, bond yields and corporate earnings," he said.

While geopolitical uncertainties remain unresolved, Nair said sustained stability in energy prices could improve earnings visibility and provide a firmer foundation for a broader market recovery.

The market's performance on Tuesday showed that lower crude prices alone were not enough to sustain the early gains, with weakness in IT and selected heavyweight stocks weighing on the benchmarks.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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