Indian equity benchmarks, the Nifty 50 and Sensex, declined on Monday, with the Nifty closing below the 23,800 level at 23,779.15, a 0.50% loss. The Sensex fell by 382.62 points, or 0.50%, to 76,132.81, marking its lowest in six weeks. This downturn was primarily driven by escalating US-Iran tensions leading to higher crude oil prices, which hovered near $97 a barrel for Brent crude, and increased expectations of a September interest rate hike by the US Federal Reserve following strong US jobs data. Rising US bond yields also added pressure, particularly on emerging-market equities, while persistent foreign institutional investor selling further dampened sentiment.
Sector-wise, the Nifty IT index was among the biggest losers, falling 2.28%, as investors worried about the impact of higher US interest rates on technology spending. Major drags on the Nifty 50 included Infosys (down 3.76%), Reliance Industries (down 0.95%), and State Bank of India (down 1%). The Nifty Media index also saw a significant decline of 2.86%. In contrast, the Nifty Pharma index bucked the trend, gaining 0.75%, with Apollo Hospitals and Wockhardt among the top gainers, as healthcare stocks were seen as defensive plays amid macroeconomic caution.
While India's market faced headwinds, other Asian markets displayed strength, particularly in technology shares. Japan's Nikkei rebounded 2.2%, South Korea's Kospi rallied 3.1% (with some sources reporting nearly 5%), and MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.1%. This regional rally was fueled by optimism over new AI models and a robust US jobs report, which was seen as positive for global growth. However, this global growth optimism also narrowed the odds on a US interest rate hike, creating a divergence in market sentiment across Asia.
The rupee remained stable against the dollar at ₹94.4850, reportedly due to intervention by the Reserve Bank of India. Despite the broader market weakness, small- and mid-cap stocks in India held up better than large-cap benchmarks, with the BSE 250 SmallCap Index rising 0.24% and the Nifty Smallcap index ending unchanged. The market breadth was negative overall, with more shares falling than rising on the BSE. The uncertainty surrounding crude prices, Middle East geopolitics, and US interest rate expectations is expected to keep volatility elevated in Indian equities.
