The Indian stock market ended lower on Friday, snapping a two-session winning run as rising crude oil prices, renewed uncertainty surrounding negotiations over the Strait of Hormuz and weakness in financial stocks weighed on investor sentiment. Concerns over the Reserve Bank of India's draft framework proposing tighter norms for certain revolving credit products offered by non-bank financial companies (NBFCs) also added to market caution.
Key Highlights
- Indian stock market ended lower as crude oil prices surged and financial stocks faced broad-based selling pressure on Friday.
- Sensex fell 456 points while Nifty declined 65 points as geopolitical risks and RBI proposals weighed on investor sentiment.
The BSE Sensex declined 455.59 points, or 0.58%, to close at 78,499.17, while the NSE Nifty 50 fell 65.35 points, or 0.27%, to settle at 24,570.65. During the session, the Sensex dropped as much as 578 points to hit an intraday low of 78,377.07, while the Nifty slipped 113 points to 24,522.75.
Financial Stocks Lead Market Decline
Financial stocks emerged as the biggest drag on the benchmarks as investors assessed the potential impact of the RBI's proposed regulations on the NBFC sector. Bajaj Finance was the worst-performing Sensex constituent, plunging 5.9%, while Bajaj Finserv declined 4.18% and ICICI Bank fell 3.72%. Trent, Axis Bank and Asian Paints also ended lower.
The financial market weakness was partly offset by gains in IT stocks following upbeat quarterly earnings. TCS surged 3.53% to become the top Sensex gainer after announcing its results. Mahindra & Mahindra rose 2.53%, while SBI, Tech Mahindra, BEL, Infosys and HCLTech also finished higher.
Sectorally, the Nifty Auto index outperformed with a 1.84% gain, followed by Nifty IT, which rose 1.42%. Nifty PSU Bank and Nifty Metal also gained 0.65% and 0.50%, respectively. In contrast, Nifty Financial Services 25/50 declined 1.43%, while Nifty Private Bank fell 1.04%.
Also Read: Sensex and Nifty End Higher Despite Banking Weakness
Crude Oil Surge Adds to Market Pressure
Market volatility increased as India VIX climbed as much as 3.2% to 12.55, marking its strongest rise since the third week of July. Rising geopolitical tensions surrounding the US-Iran conflict further contributed to investor caution.
Brent crude prices jumped more than 2% to reclaim the $84-a-barrel level after Iran published a draft proposal that included restrictions on US and Israeli vessels using the Strait of Hormuz. The development reversed earlier optimism that negotiations could lead to the reopening of the critical shipping route.
Analysts said the renewed geopolitical risk premium in crude remains a concern for India because of the country's significant dependence on oil imports. Any deterioration in negotiations could push energy prices higher and increase volatility across Indian equities.
Investors will now track the US non-farm payrolls report, which could offer fresh clues about the Federal Reserve's monetary policy path and influence the US dollar, global capital flows and broader stock market sentiment.
