Indian equities were caught in a fresh wave of selling on Tuesday, with the benchmark indices extending their losses for a second consecutive session as a toxic mix of soaring crude oil prices, rising global bond yields, and a weakening rupee continued to rattle investor sentiment. The sell-off was broad-based, pushing the Nifty and Sensex to fresh three-month lows and raising questions over whether the market correction had further room to run.
The 50-stock Nifty touched an intraday low of 21,064, taking its two-session decline to around 571 points. The BSE Sensex, meanwhile, plunged more than 1,800 points across the two sessions, touching an intraday low of 72,064.
The pressure on Indian equities intensified as Brent crude futures climbed 1.5% to $107 a barrel. At the same time, rising US Treasury yields added another layer of pressure. Market participants were also increasingly concerned about the possibility of a weak earnings season, adding to the negative sentiment.
Ruchit Thakur, Market Analyst at VT Markets, said the surge in crude prices had changed the nature of the market correction, making it difficult to view the decline as an automatic buying opportunity.
“Brent crude climbing past $107 per barrel, this market dip shouldn’t be viewed as an automatic buying opportunity. Sustained high oil prices expand India’s import bill, weigh on the rupee, elevate inflation risks, and threaten corporate profit margins,” Thakur said.
Meanwhile Pranay Aggarwal, Director & CEO of Stoxkart echoed a similar sentiment. He also attributed the weakness to elevated crude oil prices, rising global bond yields and expectations that interest rates could stay higher for longer as key factors weighing on Indian equities.
He said crude prices above $100 a barrel were particularly concerning for an oil-importing economy such as India, given their potential impact on inflation, the import bill and corporate input costs. Higher global yields could also influence foreign institutional flows while keeping pressure on the rupee.
Aggarwal added that rate-sensitive and energy-intensive sectors could remain volatile, while relatively defensive sectors could demonstrate greater resilience. He said investors should monitor crude prices, global bond yields, geopolitical developments, FII flows, the rupee and signals from major central banks.
“Near-term volatility may remain elevated,” Aggarwal said, stressing the importance of disciplined risk management and a focus on underlying fundamentals.
Where should you invest?
With the broader market under pressure, experts advised investors against attempting to identify the exact bottom.
Thakur recommended a cautious approach instead of aggressive lump-sum investments during the initial phase of the sell-off. He said investors could selectively accumulate high-quality companies as valuations become more favourable, while retaining adequate liquidity to navigate further volatility.
Thakur said a sustained market recovery would depend significantly on crude oil prices stabilising or cooling off, along with an easing of geopolitical tensions. In an oil-driven correction, he favoured relatively defensive and less crude-sensitive sectors, including pharmaceuticals, healthcare, utilities, select financials and IT exporters.
He identified Sun Pharma, Dr Reddy’s, HCLTech, Infosys, HDFC Bank and NTPC as stocks that could be considered gradually, subject to valuations. According to him, pharmaceuticals and other defensive segments could offer relatively greater resilience if market volatility remains elevated.
Within the energy space, Thakur highlighted ONGC and Oil India, noting that higher crude prices could improve upstream realisations. Both stocks gained even as the broader market declined during Tuesday’s session. His broader strategy was to stagger purchases rather than attempt to catch the exact market bottom, while prioritising balance-sheet strength and earnings visibility.
Meanwhile, Arun Kailasan, Research Analyst at Geojit Investments Limited, said, “Upstream producers are the clearest structural beneficiaries, since higher crude directly improves their production realisations rather than squeezing them, while certain pure-play refiners are positioned differently from the OMC narrative altogether,” Kailasan said.
Moreover, Hitesh Tailor, Technical Research Analyst at Choice Broking, advised investors to focus on sectors and stocks displaying relative strength and stronger price structures despite the broader correction.
“The strategy should remain technical and stock-specific rather than broad-based. Preference should be given to sectors and stocks showing relative strength, holding major EMA support, sustaining previous breakout zones and confirming reversals or breakouts with price and volume action,” Tailor said.
Tailor identified Oil & Gas as an interesting pocket from a technical perspective, highlighting OIL and Petronet as stocks with comparatively better technical setups. He said these could remain on the radar for buying on declines near key support zones or after fresh breakouts backed by volume confirmation.
He added that the Auto sector was also showing signs of support at important technical levels, according to Tailor. He highlighted Hero MotoCorp, which was trading around a major 200-day EMA support zone, and TVS Motor, which was holding above its previous breakout zone and receiving support from its 50-day EMA.
In other sectors, Tailor said investors could selectively track IT and Pharma stocks holding key support levels and showing signs of accumulation or trend reversal. He cited Tech Mahindra as an example of a stock showing support around its weekly 50-day EMA zone.
At the same time, stocks continuing to trade below major EMAs or forming lower-high and lower-low structures could be avoided until their technical charts improve. Wipro was cited as an example of a stock showing a decline.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
