NEW DELHI: Domestic benchmark indices ended lower on Monday as rising crude oil prices and renewed geopolitical tensions around the Strait of Hormuz heightened concerns over inflation, corporate costs and global interest rates. The Nifty 50 declined 0.50 per cent to close at 23,779.15, while the BSE Sensex fell 0.50 per cent to 76,132.81, down 362.62 points.
The sell-off came as Brent crude climbed above USD 97 a barrel, while WTI traded above USD 92, after renewed US-Iran military tensions raised concerns over oil supply and shipping through the Strait of Hormuz. Brent was around USD 97.60 a barrel during Monday trading, its highest level in seven weeks. The sharp rise in crude is particularly negative for India because higher energy costs can feed into inflation, corporate input costs and the country's external balances.
Vinod Nair, Head of Research at Geojit Investments, said domestic large-cap stocks and benchmark indices remain particularly sensitive to developments around the Strait of Hormuz. “The broader market rally is becoming stretched, leaving Dalal Street increasingly exposed to supply-chain disruptions and the risk of weaker high-frequency macroeconomic indicators,” he said.
IT stocks were among the biggest losers, with the Nifty IT index declining around 2 per cent, as stronger US employment data boosted expectations of tighter monetary policy. US nonfarm payrolls rose by 162,000 in August, significantly above market expectations, while the unemployment rate remained at 4.1 per cent. The data pushed market-implied odds of a September Fed rate hike to around 59-60 per cent.
Gold prices also came under pressure as higher rate expectations increased the opportunity cost of holding non-yielding assets. Spot gold slipped nearly 1 per cent to around USD 4,398.62 an ounce, while MCX gold traded marginally lower at Rs 1,52,427.
Ashish Rajodiya, Commodity Research Analyst at PL Capital, said the stronger US jobs data had revived rate-hike bets, weighing on gold and silver. However, he noted that elevated crude prices could simultaneously support inflation-hedge demand for bullion, leaving the near-term outlook mixed.