Indian shares slide as oil spikes; refiners hit by margin crash
Indian equities are poised for a second consecutive drop as surging global oil prices driven by Middle East tensions crush refinery margins and weigh on broader risk appetite.
Indian benchmark indices fell sharply on July 22 and are signaling further losses at the open on July 23. The BSE Sensex dropped 0.92% to close at 76,755.05, while the NSE Nifty 50 lost 0.79% to finish at 23,996.25. Gift Nifty futures were trading down 101 points near 23,887 early on July 23, pointing to a negative start.
The broad-based selloff is driven by escalating Middle East conflicts that have triggered a sudden jump in global crude prices. This poses a distinct threat to India, a major energy importer that is highly sensitive to oil-driven inflation and currency depreciation.
“Indian equities are poised for a weaker start, with investor sentiment remaining fragile as escalating tensions in the Middle East fuel a fresh surge in global oil prices and weigh on risk appetite," said Ponmudi R, CEO of Enrich Money. “The combination of elevated oil prices and persistent pressure on the Indian rupee is likely to keep investors cautious, with market participants expected to closely monitor geopolitical developments and energy markets for further direction."
The macroeconomic pressure is already compounding structural pain for state-run fuel retailers, which saw their refining and marketing margins crushed. BPCL swung to a standalone net loss of ₹3,962 crore in the first quarter from a net profit of ₹6,124 crore in the year-ago period. HPCL fared worse, posting a net loss of ₹11,526.4 crore for the June quarter compared to a net profit of ₹4,901.5 crore in the preceding three months.
Results outside the oil and gas sector showed resilience but were largely overshadowed by the broader risk-off mood. Food delivery company Eternal posted a 268% year-on-year surge in consolidated net profit to ₹92 crore. Adani Green Energy grew consolidated net profit 19% to ₹845 crore, and IIFL Finance reported a 189.3% jump in consolidated net profit to ₹675.1 crore.
A private sector lender also delivered robust numbers, reporting a 46.5% year-on-year rise in first-quarter net profit to ₹1,002.5 crore. On the downside, Dr Reddy's Laboratories saw its net profit for the quarter ended June 30 plunge 69% year-on-year to ₹444 crore. Additionally, an unnamed domestic company entered into definitive agreements with Japan’s DENSO Corporation to establish two joint ventures focused on advanced electric and hybrid powertrain systems.
For market participants, the immediate focus remains fixed on external triggers rather than domestic corporate fundamentals. Until the geopolitical situation stabilizes and crude prices cool, Indian equities are likely to remain under pressure.
