Domestic equity benchmarks traded lower in early deals on Tuesday as a spike in crude oil prices above $91 a barrel weighed on investor sentiment amid fading hopes of a US-Iran peace deal.
In morning trade, the Sensex declined 365 points, or 0.47 per cent, to 77,362, hitting an intraday low. The Nifty traded 76 points, or 0.31 per cent, lower at 24,211.
Sector-wise, Nifty IT was the top loser, declining more than 1 per cent. Nifty MidSmall IT & Telecom fell 0.62 per cent, while Nifty Realty declined 0.4 per cent. Financial services, private banks, media, metals and FMCG indices also traded marginally lower.
On the other hand, Nifty Auto gained 0.40 per cent, while PSU Bank rose 0.29 per cent.
Ahead of the market opening, analysts said the rise in Brent crude and an increase in US 10-year Treasury yields were likely to weigh on equities in the near term. The US 10-year bond yield has risen to 4.73 per cent, which could be negative for foreign institutional investor flows, they said.
However, analysts noted that a resilient Indian economy and signs of an earnings growth turnaround could provide support to domestic equities. They further said domestic institutional investors, which have substantial funds, could step in to buy significant dips, while retail investors may use market declines to gradually accumulate quality stocks for the long term.
Heightened geopolitical tensions are likely to keep markets volatile.
The selling came after reports indicated that Iran could adopt a more offensive posture, while US President Donald Trump ruled out an extension to the ceasefire arrangement, intensifying concerns over potential disruptions to energy supplies.
Following the developments, Brent crude, the international oil benchmark, rose 0.60 per cent from the previous close to trade above $91 a barrel. US West Texas Intermediate crude also gained more than 1 per cent to $85.37 a barrel.
