Key Highlights:

  • Markets open lower: Nifty 50 fell 36.05 points (0.15%) to 23,743.10, while Sensex dropped over 150 points (0.21%) to 75,970.28.
  • IT, Auto lead losses: Nifty IT and Nifty Auto were the top sectoral losers, plunging nearly 1% in early trade.
  • Fifth week of downtrend: Analysts said the market is in its fifth consecutive week of a slow, steady decline, driven by crude prices, Fed rate hike fears and IPO-driven liquidity absorption.
  • Largecap opportunity flagged: Experts suggested largecaps offer favourable risk-reward as midcap and smallcap stocks may see a reversion to the mean.
  • Crude prices climb on Iran warning: Oil prices rose further after Iran warned of retaliatory action against any fresh US strikes, raising fears of Gulf supply disruptions.

Mumbai: Indian equity benchmarks opened lower on Tuesday, weighed by elevated crude prices with selling in IT and auto shares amid concerns over a possible US Federal Reserve rate hike this month.

Nifty 50 opened 36.05 points or 0.15 per cent lower at 23,743.10, while Sensex fell over 150 points or 0.21 per cent to 75,970.28.

Sectoral Trends: IT And Auto Under Pressure

Among sectoral indices, Nifty IT and Nifty Auto were top losers and plunged up to around 1 per cent in early trade. Nifty Oil & Gas fell 0.48 per cent, followed by Nifty Private Bank, which declined 0.39 per cent. On the other hand, Nifty Metal rose 0.45 per cent.

Why A Fed Rate Hike Matters For Indian Markets: When the US Federal Reserve raises interest rates, US bonds and deposits become more attractive to global investors relative to emerging markets like India. This often triggers foreign investors to pull money out of Indian equities and shift it into US assets, adding downward pressure on indices like the Sensex and Nifty — a key reason markets react cautiously even to the possibility of a hike, not just a confirmed one.

A Fifth Week Of Downtrend

The market is now in its fifth week of a slow but steady downtrend, market experts said, citing elevated crude prices, selling in IT stocks, Fed rate hike fears and liquidity being absorbed by a booming IPO market.

They said the weakness in largecap stocks despite improving fundamentals could create opportunities for investors, while a possible reversion to the mean in midcap and smallcap stocks may facilitate a rally in fundamentally sound largecaps.

"Instead of trying to time the market, investors can think about changing the weightage of portfolios towards largecaps where the risk-reward is favourable," according to them.

Key Technical Levels

Technically, the Nifty is expected to find resistance at 23,860, while 23,720 is seen as an immediate downside marker. A break below that level could expose supports at 23,570 and 23,260, the analysts said.

Global Cues: Iran Tensions Push Crude Higher

In addition, Asian markets traded mixed in morning trade on Tuesday, lacking a clear direction amid uneven regional economic data and renewed concerns over Iranian threats in the Persian Gulf.

Crude oil prices continued to climb as concerns over an extended Middle East conflict intensified after Iran warned of retaliatory action against any fresh US strikes on its assets, raising fears of potential supply disruptions.

Also Read: Sensex, Nifty Open Higher as Crude Prices Ease on Iran-Oman