New Delhi: Indian benchmark indices opened lower on Monday as oil prices approaching USD 97 a barrel and renewed expectations of a US interest-rate increase outweighed gains in several Asian markets.
The 30-share BSE Sensex fell 172.77 points to 76,342.66 in early trading, while the NSE Nifty declined 63.30 points to 23,832.60.
Information technology stocks bore much of the selling pressure. Infosys, Tech Mahindra, HCL Technologies and Tata Consultancy Services were among the major Sensex laggards. Tata Steel and UltraTech Cement also traded lower.
Eternal, Bharti Airtel, Bharat Electronics Limited and Larsen & Toubro were among the stocks resisting the broader decline.
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Crude oil remained the principal external risk for the domestic market. Brent crude rose about 0.8 percent to around USD 97 per barrel as the latest escalation in hostilities between the US and Iran renewed concerns over supplies through the Strait of Hormuz. West Texas Intermediate was trading around USD 92 per barrel.
High crude prices are particularly concerning for India because of the country’s heavy dependence on imported oil. A sustained increase can widen the import bill, place pressure on the rupee and add to inflation risks.
“Crude oil remains the dominant macro driver. WTI continues to trade at elevated levels around USD 91-92 per barrel as the latest escalation in US-Iran hostilities around the Strait of Hormuz keeps concerns over potential supply disruptions firmly in focus,” said Ponmudi R, Chief Executive Officer of Enrich Money.
Brent crude reached about USD 97.07 a barrel in early trading amid continuing disruption concerns in the strategically important shipping corridor, Reuters reported.
Investor sentiment was also affected by a stronger-than-expected US employment report, which revived concerns that the Federal Reserve could raise interest rates or keep monetary conditions restrictive for longer.
“Friday’s US jobs report came in far stronger than expected, reviving concerns over a possible interest-rate hike, while fresh attacks in the US-Iran conflict are keeping oil prices at elevated levels, posing a key overhang for domestic investor sentiment,” said Hariselvan Radhakrishnan, founder and Chief Executive Officer of HST Wealth.
The next major global trigger will be the US inflation data scheduled for Friday. The numbers are expected to influence expectations surrounding the Federal Reserve’s next policy move and, consequently, global capital flows and risk appetite.
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Asian markets presented a mixed picture. South Korea’s Kospi jumped 3.36 percent and Japan’s Nikkei 225 gained 1.83 percent, while markets in mainland China and Hong Kong traded lower. US equities had ended in negative territory on Friday.
Foreign Institutional Investors sold Indian equities worth a net Rs 3,111.94 crore on Friday. Domestic Institutional Investors, however, were net buyers of shares worth Rs 8,930.12 crore, partly cushioning the impact of foreign selling, according to provisional exchange data.
In the previous session, the Sensex had advanced 362.57 points, or 0.48 percent, to settle at 76,515.43. The Nifty posted a more modest gain of 24.25 points, or 0.10 percent, to close at 23,897.70.
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