Indian small-caps slide as crude oil climbs past $116 a barrel
India's Sensex and Nifty 50 edged lower on Thursday as oil prices pushed above $116 a barrel, while smaller-company stocks fell much harder amid broad selling pressure.
The Sensex dropped about 40 points to around 74,100, and the Nifty 50 lost roughly 20 points to trade near 22,915 by mid-morning. The decline was far sharper in smaller names: the Nifty Smallcap 250 index tumbled nearly 2% and the Nifty Midcap 100 fell 1%.
Market breadth was weak, with the National Stock Exchange recording 2,398 declining stocks against only 790 advancers. Among sectors, consumer durables led losses, down almost 2%, while metals, PSU banks, realty and FMCG stocks each slipped around 1%. Information technology stocks bucked the trend, rising roughly 2% on gains in names such as Infosys, TCS and Tech Mahindra.
On the Sensex, Trent jumped 6% after strong earnings from the Tata Group retailer, while SBI and Bharat Electronics fell about 2% each, among the session’s biggest laggards.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the rise in crude oil was becoming a bigger drag on sentiment, citing reports that the United States could resume strikes on Iran after its November 3 mid-term elections. He added that foreign institutional selling had eased but the overall market setup still looked unfavourable for a sustained rally. He also pointed to strong US economic data — 3.4% third-quarter GDP growth and a 3.6% PCE inflation reading — as factors likely to keep US bond yields elevated and continue drawing safe-haven flows.
Separately, Geojit’s Chief Market Strategist Anand James said he would watch for a break below the 22,715 level on the Nifty before giving up on near-term upside, with a target of 23,050 intact as long as dips hold above 22,820.
Why it matters: Crude oil above $116 a barrel raises input-cost and inflation concerns for oil-importing economies like India, pressuring equities and the rupee, while strong US growth and inflation data supporting higher Treasury yields can draw capital away from emerging markets such as India.
Source: Economic Times Markets