Indian shares subdued as rising crude prices eclipse IT gains
India's stock market gave up early gains on Friday to extend losses into a fourth trading session, as surging oil prices on Middle East tensions outweighed gains in IT stocks, which rose after a global selloff in AI-linked shares.
The NSE Nifty 50 fell as much as 1.23% to an intraday low of 22,407.05 points even as the BSE Sensex shed 1.04% to 72,487.47. They had risen about 0.3% and 0.6% in early trade, before reversing their gains.
The equity benchmarks lost about 2% in the last three sessions, with sentiment dampened by a rise in Brent crude oil futures to about $114 a barrel, on energy supply fears after attacks on top exporter Saudi Arabia by Yemen's Houthis.
"Brent near $114 is a dominant risk for India," said Hariselvan Radhakrishnan, founder and CEO of HST Wealth, adding that oil is no longer just creating temporary pressure on sentiment, but could intensify inflation and hurt consumption and corporate profitability.
Fifteen of the 16 major sectors logged losses. The broader small-caps and mid-caps lost 3.4% and 2.5%, respectively.
IT index jumped 1%, in contrast to the drop in tech stocks in Asia, after a more than 2% drop in the Nasdaq composite index overnight.
Meta shares lost nearly 8%, overnight on Wall Street, after the Facebook parent posted its first cash outflow in more than a decade due to its AI-related expenditure.
Analysts view Indian IT stocks as a relative hedge against the global AI trade because they can benefit from companies' growing need for AI consulting, integration and managed-services work, while requiring far less upfront spending on data centres and chips than global hyperscalers.
Among stocks, Swiggy tumbled 13%, with multiple brokerages flagging concerns over the company's ability to turn around its quick-commerce unit and margins in its food delivery business.
Colgate-Palmolive India lost 4.6% on concerns over a modest growth trajectory after the company posted a 4% rise in September quarter profit.
Cyient jumped 7.5% after posting upbeat quarterly results.