India equities dip as Brent tops $90, private bank earnings disappoint
Escalating Middle East conflicts pushed Brent crude above $90 to drag Indian equities lower, while a sharp divergence emerged in the banking sector as state-owned lenders surged on strong earnings and private peers slumped on margin pressures.
Indian benchmark indices closed lower on Monday as escalating Middle East tensions disrupted global energy markets and overshadowed domestic corporate earnings. The Nifty 50 fell 0.40% to 24,233 and the Sensex dropped 0.53% to 77,737, though broader midcap and smallcap indices bucked the trend to close higher.
Geopolitical risks dominated trading after the U.S. extended attacks on Iran for a tenth consecutive day and Iran fired missiles toward Jordan, raising the threat of a wider regional war. Shipping through the Strait of Hormuz has largely stalled, pushing benchmark Brent crude above $90 per barrel. The oil spike revived investor fears that central banks will maintain tighter monetary policy to combat inflation.
The macro turbulence exposed a sharp divide within India's financial sector, signaling a shift in investor appetite toward state-backed lenders. The Nifty PSU Bank index surged nearly 3% after a string of strong earnings, while the Nifty Private Bank index plunged 2.25%.
Private lenders bore the brunt of the selling as investors reacted poorly to June quarter results highlighting net interest margin compression. Axis Bank and HDFC Bank fell 5.4% and 5.1% respectively. YES Bank and Kotak Mahindra Bank dropped 3% and 2%.
State-owned banks provided the market's main support. Punjab National Bank jumped 5.7% to ₹111 after reporting a more than threefold increase in quarterly profit. Union Bank of India gained 4.4% and Indian Overseas Bank rose 3.4% to ₹35 after beating estimates. This lifted peers including Bank of Baroda, Indian Bank, Canara Bank, and Bank of India, which gained between 2.5% and 3.3%.
Rising crude prices pressured commodity-sensitive businesses, with tire maker CEAT falling 4% to ₹3,410. New-age technology stocks also declined, with Ola Electric down 2.5% to ₹39 and Swiggy dropping 2.3% to ₹270. Pharma and media sectors offset some losses, each gaining more than 1%, while individual names like Himadri Speciality Chemical, Vedanta, and Trent climbed over 3%.
