Brent crude crossing $108 per barrel due to geopolitical tension in the Strait of Hormuz is weighing on market sentiment. While foreign investors turned net buyers, the market faced selling pressure as domestic institutions ended a 45-day buying streak. Axis Bank led the decline in financial stocks, whereas energy producers like ONGC saw gains.
Indian stock markets began the week on a cautious note as investors processed the impact of rising global crude oil prices. Brent crude is currently trading above $108 per barrel, driven by ongoing geopolitical tensions in the Strait of Hormuz. Because India relies on oil imports, sustained price increases in crude generally lead to concerns about inflation and the country's rising import bill, which creates a challenging environment for broader market sentiment.
The energy sector, however, moved in the opposite direction. Companies like ONGC recorded gains, reflecting the typical market trend where energy producers benefit when oil prices rise. In contrast, the financial sector faced sharp selling pressure. Axis Bank shares declined by 3.84% to settle at ₹1,240.50, and HDFC Bank also retreated by 1.60%. Financial stocks carry the highest weightage in the Nifty index, so weakness in these heavyweights makes it difficult for the overall market to stage a recovery.
Institutional investor behavior also showed a significant shift. Foreign Institutional Investors (FIIs) returned to the buying side, recording net purchases of approximately ₹1,166 crore. This is a change from their previous pattern of consistent selling. However, this positive flow was offset by Domestic Institutional Investors (DIIs), who sold equities worth ₹3,661 crore. Notably, this move by DIIs marks the end of a 45-session buying streak, which has been a major pillar of support for Indian equities in recent weeks. The withdrawal of this domestic support is contributing to the current volatility.
Technically, the Nifty 50 remains range-bound, struggling to sustain momentum above the 23,150 to 23,200 resistance levels. Support is being tested between 23,000 and 22,900. With international indices in Japan and South Korea also experiencing downward pressure, traders are focusing less on broad market trends and more on company-specific outcomes from the ongoing second-quarter earnings season. Investors will likely watch the Bank Nifty index to see if it can break above the 56,000 level, which would be a key indicator for any renewed strength in the financial sector.