Indian equities extend losses as rising crude oil, higher global bond yields and RBI’s rate hike weigh on sentiment; IT stocks outperform
Indian equity markets remained under pressure on Thursday as negative global cues, elevated bond yields and renewed concerns over inflation weighed on investor sentiment. The sell-off came a day after the Reserve Bank of India raised the repo rate by 25 basis points to 5.5 per cent and shifted its policy stance to calibrated tightening.
At around 10 AM, the Sensex was down 373 points, or 0.51 per cent, at 72,265, while the Nifty 50 declined nearly 130 points, or 0.57 per cent, to 22,473. The broader market also remained weak, with the Nifty MidCap and SmallCap indices trading lower.
Global cues remain negative
The domestic market tracked weakness across global equities as investors reacted to a renewed rise in government bond yields and crude oil prices.
Asian markets declined on Thursday, while Wall Street ended lower in the previous session after a sharp rise in US Treasury yields revived concerns about inflation, government borrowing and the future path of interest rates.
Brent crude moved above $100 per barrel, adding another layer of concern for oil-importing economies such as India. Rising energy costs can put pressure on inflation, corporate margins and the country's current account balance.
Adani Group shares decline
Adani Group stocks were among the major losers in Thursday's session. Adani Enterprises, Adani Ports and Special Economic Zone, Adani Total Gas and Adani Green Energy declined by as much as 5 per cent.
The weakness came despite broader investor interest in individual corporate developments, highlighting the risk-off tone prevailing across several parts of the market.
IT stocks outperform
The IT sector was a notable exception to the broader weakness. Mphasis, Tata Consultancy Services (TCS) and Coforge were among the leading gainers in the Nifty IT index.
IT stocks received support from expectations of resilient technology spending and the beginning of the September-quarter earnings season. TCS is among the key companies investors will watch as corporate results gather momentum.
The IT sector's relative outperformance also comes as investors reassess sectors that may be less directly exposed to higher domestic borrowing costs.
Senco Gold jumps after business update
Shares of Senco Gold surged nearly 12 per cent to ₹358.80 after the jewellery retailer reported its highest-ever topline of around ₹5,000 crore for H1FY27.
The sharp move demonstrates that stock-specific earnings and business updates continue to attract buying interest even as benchmark indices remain under pressure.
RBI rate hike changes market equation
The RBI's decision to raise the repo rate to 5.5 per cent marks its first rate increase since February 2023. The central bank also moved its policy stance from neutral to calibrated tightening as inflation risks broadened.
While the rate increase was broadly anticipated, investors are now focusing on whether the move marks the beginning of a longer tightening cycle.
Higher interest rates can increase borrowing costs for companies and consumers, potentially affecting sectors such as real estate, automobiles and other interest-rate-sensitive businesses. At the same time, analysts expect banks and housing finance companies to potentially benefit from improved lending yields and earnings prospects.
Earnings season takes centre stage
With the September quarter earnings season underway, corporate results are likely to become an increasingly important driver of individual stocks.
Motilal Oswal Financial Services expects India Inc's earnings growth to accelerate by around 22 per cent year-on-year in Q2FY27, supported by domestic resilience despite a challenging global environment.
Investors will therefore be watching revenue growth, margins, management commentary and guidance closely as companies begin reporting their quarterly numbers.
Rupee and crude remain key risks
The rupee remains another important variable for the market. The currency slipped close to its record low against the US dollar following the RBI decision, while higher crude prices are adding pressure because India remains heavily dependent on imported oil.
A prolonged period of crude above $100 could increase inflationary pressure and potentially encourage further monetary tightening, creating a challenging environment for equity valuations.
Market Outlook
The near-term market setup remains cautious. Crude oil prices, US Treasury yields, the rupee, foreign fund flows and Q2FY27 corporate earnings are likely to determine the next major market move.
The Nifty's immediate zone around 22,450-22,500 will be important to watch. Sustained weakness below this area could keep selling pressure intact, while a recovery above the opening resistance zone would be required to improve sentiment.
For investors, the current environment favours stock-specific opportunities over aggressive broad-market positioning. Strong earnings visibility, healthy balance sheets and companies with pricing power could remain relatively better placed as markets navigate higher rates, elevated oil prices and global uncertainty.