Sensex and Nifty erase early gains as crude oil surge and AI sell-off weigh
Indian equities reversed early gains on Friday, with the Sensex and Nifty 50 closing lower for a fourth consecutive session as surging crude oil prices and a global sell-off in technology stocks overwhelmed a firm open.
The BSE Sensex rose 517 points, or 0.7%, to an intraday high of 73,766.51 before falling to a low of 72,487.47, a swing of 1,279 points from its peak. The NSE Nifty 50 climbed 99 points to 22,787.25 before sliding 380 points to 22,407.05. The benchmarks had already lost around 2% over the preceding three sessions.
Brent crude futures rose 0.5% to $113.73 a barrel, near their highest since May, while US benchmark crude gained 0.6% to $100.08. The source reported that attacks by Yemen's Houthi rebels on Saudi Arabia added to concerns over the security of regional energy infrastructure. For India, sustained higher energy import costs can pressure inflation, the rupee, corporate margins and the external balance.
V K Vijayakumar, chief investment strategist at Geojit Investments, described Brent's surge towards $114 a barrel as a major negative for the economy and markets, though he said lower US Treasury yields, rupee appreciation and the return of liquidity after IPO allotments could offset some of the pressure. Vinod Nair, head of research at the same firm, said near-term direction would depend on quarterly earnings and management commentary on demand.
The weakness was broad. The Nifty Smallcap 100 and Nifty Midcap 100 fell as much as 3%, while the Nifty Metal and Nifty Consumer Durables indices dropped around 3% each. Swiggy fell 13% on brokerage concerns over its quick-commerce turnaround and food delivery margins, and Colgate-Palmolive India dropped 4.6% after September-quarter profit rose just 4%. Cyient gained 7.5% on upbeat quarterly results, and the Nifty IT index rose around 1%.
Global markets added to the headwind. The S&P 500 fell 1.2% and the Nasdaq Composite 2.6% overnight as investors reassessed AI-related valuations, while Japan's Nikkei 225 declined 1.7% and South Korea's Kospi 2.4%. Hemang Gor, senior research analyst at Axis Direct, said holding above the 22,800 resistance level could trigger a short-covering rally towards 23,000, with 22,500 a critical support.
