Indian equities slip as geopolitical tensions and weak IT sector weigh on sentiment

Indian equity markets opened the week on a weak note, with the benchmark indices declining amid rising geopolitical tensions in West Asia and continued pressure on IT stocks. The BSE Sensex closed 511.38 points, or 0.62 per cent, lower at 81,896.79, while the Nifty 50 lost 140.50 points, or 0.56 per cent, to settle at 24,971.90, slipping below the key 25,000 mark. While the headline indices declined, broader markets showed resilience, with the BSE Midcap index gaining 0.2 per cent and the Smallcap index rising 0.6 per cent. The Nifty Midcap and Smallcap indices outperformed for the second straight session, supported by selective buying in capital goods and defence stocks.

The early weakness came after the US launched airstrikes on Iranian nuclear sites over the weekend, escalating tensions in West Asia and briefly pushing Brent crude prices to a five-month high of $81.40 per barrel, before retreating to $78.93 per barrel. The market mood remained cautious as investors monitored potential retaliatory actions from Iran, particularly fears around disruptions to crude supplies via the strategic Strait of Hormuz.

IT and auto drag, defence and metal stocks gain

Sectorally, IT stocks led the decline, with the Nifty IT index dropping over 1.48 per cent, following Accenture’s weak Q3 results and a third straight quarter of year-on-year decline in outsourcing contracts. Major Indian IT firms like Infosys, HCL Tech, and TCS ended lower by 1-2.5 per cent, as concerns grew around sustained softness in global tech spending, particularly from the US.

Auto and FMCG stocks also witnessed profit booking. The auto index fell amid investor reaction to the government’s proposal for mandatory ABS for all new two-wheelers, which could raise costs. Bajaj Auto dropped around 1 per cent, while Hero MotoCorp and Mahindra & Mahindra also ended in the red.

On the positive side, metal and capital goods stocks rebounded during the day, supported by easing oil prices and renewed interest in manufacturing-linked sectors. Hindalco Industries, Bharat Electronics, and Adani Enterprises were among the top gainers. Defence stocks rallied on order wins and safe-haven demand, with Garden Reach Shipbuilders rising 6 per cent.

Rupee weakens; oil prices, RBI action in focus

The Indian rupee fell 16 paise to close at 86.75 per US dollar (provisional), pressured by risk aversion and a flight to safe-haven assets like the US dollar. The dollar index climbed nearly 0.4 per cent, while most Asian currencies slipped between 0.2 per cent and 1.4 per cent. Traders said further escalation in West Asia could push the rupee below the psychological 87 level, though intervention from the Reserve Bank of India is likely if volatility spikes.

Looking ahead, with limited domestic triggers, global market cues and crude price trends will be key in setting near-term market direction. Analysts suggest focusing on selective stock-picking amid the ongoing consolidation, especially in sectors showing relative strength.