Indian benchmark indices opened lower on Monday as weakness in banking stocks and rising crude oil prices weighed on investor sentiment. The BSE Sensex declined over 600 points in early trade, while the Nifty slipped nearly 150 points.
The fall was mainly driven by private sector banking stocks following the release of June-quarter earnings.
HDFC Bank and Axis Bank dropped around 5% each as investors reacted negatively to their quarterly results. Kotak Mahindra Bank also traded lower, adding to the pressure on the indices.
Together, the three private lenders emerged as the biggest drags on the benchmark indices.
The declines in banking stocks offset gains in heavyweight companies such as Reliance Industries, State Bank of India, Bharti Airtel, ONGC and Tech Mahindra.
Market sentiment was further impacted by global developments, particularly the rise in crude oil prices.
Brent crude crossed the $90-per-barrel mark amid escalating tensions between the United States and Iran, raising concerns over possible supply disruptions.
Higher crude prices remain a major concern for India, which imports more than 85% of its crude oil requirements.
A sustained increase in oil prices could widen the country’s trade deficit, put pressure on the rupee and impact foreign portfolio investor (FPI) flows.
Geojit Investments Chief Investment Strategist VK Vijayakumar said rising crude prices were among the biggest near-term risks for the Indian market.
He warned that a prolonged energy shock could hurt the rupee and reduce foreign investor appetite.
However, Vijayakumar added that weakening enthusiasm around artificial intelligence-related stocks in markets such as the US, South Korea and Taiwan could make Indian equities comparatively more attractive to global investors.
On the earnings front, he said Reliance Industries delivered encouraging results, while ICICI Bank reported strong performance and Kotak Mahindra Bank also posted healthy numbers.
However, HDFC Bank disappointed investors, particularly due to concerns over its net interest margin (NIM).
With the quarterly earnings season gaining momentum and crude oil prices remaining elevated, investors are expected to closely monitor corporate results, global geopolitical developments and market volatility for further direction.