Sensex opens 100 points higher, Nifty nears 23,100; IT stocks drag

Benchmark indices opened marginally higher on Friday after suffering their steepest single-session fall in 10 weeks in the previous session. However, gains remained limited as elevated crude oil prices and high US bond yields continued to weigh on investor sentiment.

The Sensex opened at 73,525.92, up slightly from Thursday's close of 73,580.54, while the Nifty 50 opened at 23,035, against its previous close of 23,063.10. By 9:41 am, the Sensex was at 73,627.12, up 46.58 points or 0.06%, while the Nifty was at 23,067.50, up 4.40 points or 0.02%.

Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "Sometimes many negative news come together to spook the markets. This was what happened yesterday when rising US bond yields, spiking crude and concerns over IRDA’s proposals on insurance commissions spooked the Nifty by 383 points.

"The US 10-year yield hovering around 5.2% continues to be a strong headwind for equity markets globally and for India elevated crude would remain a big challenge if it remains high for too long," he added.

The opening was cautious rather than a strong rebound, with investors assessing whether Thursday's sharp sell-off was followed by some stability or could extend into another session.

FINANCIAL STOCKS REMAIN UNDER PRESSURE

Financial stocks continued to face pressure after the proposed changes to insurance commission structures by the Insurance Regulatory and Development Authority of India (IRDAI) triggered heavy selling in banks, NBFCs and insurance-linked companies on Thursday.

At 9:41 am, Bajaj Finance was down 0.56%, Bajaj Finserv fell 0.56%, Axis Bank declined 0.75% and ICICI Bank slipped 0.16%. HDFC Bank was down 0.23%, while Kotak Mahindra Bank fell 0.11%.

The Nifty Financial Services 25/50 index was down 0.09%, while the Financial Services Ex-Bank index fell 0.28%.

PB Fintech shares fell 2.53% to Rs 1,176.70 in early trade on Friday, extending pressure after the stock plunged 36% in the previous session following concerns over the proposed IRDAI changes to insurance commission structures.

IT STOCKS DRAG, METALS GAIN

IT stocks were among the early drags on the benchmark indices. The Nifty IT index fell 0.78%, with Infosys down 0.95%, Tech Mahindra down 0.60%, TCS down 0.54% and HCLTech down 0.62%.

On the other hand, metal stocks gained, with the Nifty Metal index up 0.53%. Auto stocks also rose 0.32%, while pharma gained 0.24%.

Among Sensex stocks, M&M was the top gainer, rising 1.04%, followed by Asian Paints at 0.85%, Axis Bank at 0.75%, HCLTech at 0.62%, L&T at 0.59% and Power Grid at 0.56%.

The broader market was largely mixed in early trade. The Nifty 100 was up 0.02%, while the Nifty 200 and Nifty 500 were almost flat.

The Nifty Midcap 50 fell 0.16% and Midcap 100 declined 0.12%, while the Nifty Smallcap 100 gained 0.13%.

India VIX, a measure of market volatility, fell 0.68% to 12.60, suggesting some moderation in volatility after Thursday's sharp sell-off.

CRUDE EASES BUT REMAINS ABOVE $105

Crude oil prices eased on Friday but remained elevated. Brent crude was at $105.66 a barrel, down 0.88%, while WTI crude stood at $93.09, down 1.61%.

The decline offers some relief after the sharp rise in oil prices that contributed to Thursday's sell-off. However, Brent remains above $105, keeping concerns over inflation, India's import bill and corporate profitability alive.

Markets are also tracking developments between the US and Iran, including the possibility of a truce and progress towards reopening the Strait of Hormuz.

"High crude and stubborn inflation have increased the probability of another rate hike by the Fed in October. In brief, the headwinds for the market are getting stronger, preempting possibilities for a strong rally. Only a sharp decline in crude prices can help the market rally now," said Vijaykumar.

"Therefore, watch out for developments on the crude front. Long-term investors can utilise the current weakness in the market to slowly accumulate fundamentally sound stocks, particularly the large-caps, now available at attractive valuations," he added.

For Friday's session, the market's ability to hold the early gains will depend largely on crude oil, global bond yields and whether financial stocks find some stability after Thursday's sharp sell-off.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)