Sensex, Nifty Fall 0.5% as IT Stocks, Crude Oil Weigh on Markets
Indian benchmark indices began the week on a weak note, extending pressure after four consecutive weekly declines. Selling in IT stocks, elevated crude oil prices and renewed concerns over tensions around the Strait of Hormuz kept investors cautious, although buying in select sectors helped the benchmarks recover from their intraday lows.
The BSE Sensex fell 382.62 points, or 0.50%, to close at 76,132.81. The index opened at 76,446.05 against Friday’s close of 76,515.43 and moved between an intraday high of 76,477.19 and a low of 75,970.52.
The Nifty 50 declined 118.55 points, or 0.50%, to end at 23,779.15. It opened at 23,883.15, touched a high of 23,890 and slipped to a low of 23,737.90.
Crude oil, Strait of Hormuz tensions unsettle investors
Oil prices remained a key source of concern for Indian equities as tensions around the Strait of Hormuz raised worries about global energy supplies.
Brent crude was trading at $96.71 a barrel, up 0.45%, while West Texas Intermediate (WTI) crude rose 0.05% to $91.53.
Higher oil prices are particularly significant for India because of the country’s dependence on imported crude. A prolonged increase in energy costs could raise the import bill, add to inflationary pressures and squeeze corporate margins.
The Nifty Oil & Gas index declined 0.61%, while the Nifty Auto index was almost unchanged, slipping 0.04%.
Vinod Nair, Head of Research at Geojit Investments Limited, said developments around the Strait of Hormuz continued to influence domestic benchmark indices and large-cap stocks.
“Domestic main benchmark indices and large-cap stocks remain influenced by developments in the Strait of Hormuz,” Nair said.
The rupee was largely steady against the US dollar at 94.485, with the currency caught between RBI intervention and pressure from higher crude prices.
IT stocks emerge as biggest drag
Information technology stocks were among the biggest losers during Monday’s session, with the Nifty IT index falling 2.28%.
Infosys led the losses among major IT companies, declining 3.81%. Tech Mahindra dropped 1.96%, TCS fell 1.28% and HCL Technologies declined 0.93%.
The selling came amid renewed concerns over US interest rates after stronger-than-expected US employment data increased expectations of a possible September rate hike by the Federal Reserve.
Higher US rates can affect corporate spending and technology budgets, particularly in the US market, which remains a major source of revenue for Indian IT companies.
The broader IT and telecom segment also remained under pressure, with the Nifty MidSmall IT & Telecom index falling 0.49%.
Global rate outlook adds to market uncertainty
Rising crude prices have added another layer of concern because higher energy costs can contribute to inflation. At the same time, stronger US economic data has raised expectations that the Federal Reserve may maintain a tighter monetary stance.
Higher US interest rates can make dollar-denominated assets more attractive and potentially increase pressure on emerging-market equities.
However, the broader Indian market showed signs of selective buying, particularly in parts of the mid-cap and small-cap universe.
Nair said the market was showing a divergence between weakness in headline indices and buying interest in selected broader-market stocks.
“The broader market shows a clear divergence, with small-caps and select mid-caps rally backed by stronger earnings,” he said.
Small-caps show relative resilience
The broader market declined less sharply than the frontline indices.
The Nifty 100 fell 0.48%, while the Nifty 200 and Nifty 500 declined 0.48% and 0.42%, respectively.
Among mid-cap indices, the Nifty Midcap 50 fell 0.42% and the Nifty Midcap 100 declined 0.46%. The Nifty Smallcap 100, however, managed to finish marginally higher by 0.02%.
Investor caution was reflected in the India VIX, which climbed 5.61% to 11.28.
According to Nair, value buying has picked up following the market sell-off in late 2025 and early 2026, with investors increasingly attracted by valuations as the earnings outlook improves.
“Value buying has gained traction following the late-2025 and early-2026 sell-off, making valuations attractive as corporate earnings shifts from downgrades to upgrades,” he said.
He also cautioned that the broader-market rally could become vulnerable if the factors supporting earnings and valuations begin to weaken.
Pharma, healthcare outperform
Sectoral performance remained mixed on Monday.
The Nifty Media index was the worst performer, falling 2.86%, followed by Nifty IT, which declined 2.28%. Nifty Realty dropped 1.70%, Nifty Metal fell 1.24% and Nifty FMCG declined 0.66%.
Financial stocks also remained under pressure. Nifty Financial Services 25/50 declined 0.51%, Nifty PSU Bank fell 1.06% and Nifty Financial Services Ex-Bank dropped 0.57%. Nifty Private Bank was comparatively resilient, declining 0.28%.
Nifty Consumer Durables fell 0.42%, while Nifty Chemicals declined 0.46%.
Healthcare and pharmaceutical stocks bucked the broader trend. Nifty Pharma gained 0.75%, while Nifty Healthcare rose 0.68%. Nifty 500 Healthcare advanced 0.78% and Nifty MidSmall Healthcare gained 0.65%.
Infosys leads Sensex losses
Among Sensex constituents, Larsen & Toubro was the top gainer, rising 0.61%. Bharti Airtel gained 0.60%, Maruti Suzuki rose 0.47%, Power Grid advanced 0.36% and ICICI Bank gained 0.35%. InterGlobe Aviation (IndiGo) added 0.10%, while Sun Pharma was marginally higher at 0.04%.
Infosys was the biggest Sensex laggard, falling 3.81%. Tech Mahindra declined 1.96%, Tata Steel fell 1.85%, Bajaj Finserv dropped 1.57% and UltraTech Cement declined 1.41%.
Other major losers included TCS, down 1.28%; Trent, down 1.16%; Asian Paints, down 1.13%; SBI, down 1.09%; and Adani Ports, down 1.05%.
HCL Technologies fell 0.93%, Reliance Industries declined 0.95%, Eternal dropped 0.82% and Kotak Mahindra Bank slipped 0.60%.
Domestic earnings provide some support
Despite the global headwinds, improving corporate earnings and relatively attractive valuations are providing support to parts of the Indian market.
Nair said higher input costs had so far had a limited impact on corporate earnings, helped by stronger consumer demand and the benefits of tax reductions that allowed companies to accommodate higher product and service prices.
However, he warned that these supportive factors could weaken going forward.
“In Q1, higher input costs had little impact on corporate earnings due to stronger consumer demand and tax reduction gains, accommodating product and service price hikes,” Nair said.
“Going forward, there is a growing risk that these supportive factors may fade potentially, weakening earnings expectations and increasing vulnerability to the broad market rally,” he added.
For Dalal Street, the near-term direction is likely to depend on a combination of domestic earnings trends and global developments. Crude oil prices, the situation around the Strait of Hormuz, expectations for US interest rates and the performance of IT stocks are likely to remain important market drivers.
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