Indian stocks drop for fifth day as oil spikes above $100
India's benchmark indices have broken key technical support levels as surging crude prices and a hawkish US rate outlook threaten corporate earnings and economic growth.
The Nifty fell 102 points on Friday, marking a fifth consecutive losing session that pushed the Sensex down more than 2,000 points over the same period. The index breached its 50-day exponential moving average, confirming a new short-term downtrend after slipping from a recent consolidation phase.
Geopolitical disruptions are the primary catalyst. Brent crude surged above $100 a barrel following Houthi attacks on Saudi Arabian tankers in the Red Sea. The resulting inflationary pressure pushed the dollar-rupee exchange rate to 96.55, compounding volatility already fueled by disappointing quarterly results from major large-cap companies.
Technically, the selling pressure has overwhelmed buyers. “The weekly chart looks more scary,” said Rupak De, senior technical analyst at LKP Securities. The Nifty has repeatedly failed to clear its 50-week exponential moving average over the past month, though Friday's late recovery from intraday lows provided a tentative foothold at the 23,600 support level.
The macroeconomic backdrop offers little refuge for risk assets. “The US 10-year yield has climbed to a 52-week high despite crude oil trading well below its crisis-era peak, reflecting the bond market's concerns over energy-led inflation risks, resilient labour market conditions, and a persistently hawkish Fed,” said Vinod Nair, head of research at Geojit Investments. Rising US rates and new American tariffs on imports further pressure export-heavy sectors like technology.
India's reliance on imported energy leaves its equity markets uniquely exposed to this geopolitical shock. “When Brent crude trades above $95, which is the price now, it is bound to have sentimental impact on the Indian market. India’s vulnerability to high oil price is once again becoming a macro concern,” said VK Vijayakumar, chief investment strategist at Geojit Investments.
Traders are watching the 23,600 level closely, as a break below could accelerate losses. Nagaraj Shetti, senior technical research analyst at HDFC Securities, noted that holding this support could trigger a relief rally toward 24,200. Despite the near-term bearish setup, Vijayakumar pointed out that the long-term uptrend remains intact, with banking stocks offering attractive valuations supported by strong credit growth and low non-performing assets.
