Indian equity markets had a restless start to Thursday, with the BSE Sensex swinging through a 286-point window. The morning session was a tug of war between falling oil prices and the US Federal Reserve possibly hinting at a rate hike.
The Sensex dropped as low as 77,033.74 in early trade and as high as 77,320.32, while the Nifty fell to a low of 24,058.85 and a high of 24,139.65.
The choppy session comes after a remarkable four-day run in which the Sensex had surged 3,323 points (4.5 per cent), and the Nifty had climbed 924 points (3.98 per cent). This also meant that a certain degree of consolidation was expected.
The silver lining was crude oil. Brent crude tumbled roughly 2.1 per cent to around $75.9 a barrel, extending the sharp decline triggered by the US–Iran peace deal.
On Wednesday, US President Donald Trump formally signed a Memorandum of Understanding with Iran at the Palace of Versailles in France, a concrete step towards ending the three-month-old conflict and reopening the Strait of Hormuz.
But the US Federal Reserve, in its first policy decision under new Chair Kevin Warsh, held rates steady but sent a distinctly hawkish signal, pointing to a possible rate hike as early as October.
That lifted US 10-year Treasury yields to 4.46 per cent, dragged Wall Street lower on Wednesday, and weighed heavily on Indian IT stocks, which fell 1 per cent on Thursday.
Infosys, Tech Mahindra, HCL Tech, and TCS were among the Sensex's biggest laggards in the morning, as investors recalibrated expectations around US technology spending.
However, stocks of financial firms with stakes in the National Stock Exchange (NSE) gained after the bourse filed its draft papers for an initial public offering on Wednesday.
Textile and alcohol stocks also rose after India and the United Kingdom agreed on a July 15 implementation date for their long-awaited Free Trade Agreement.
Thirteen of 16 major sectors advanced on Thursday morning, but Foreign Institutional Investors remained in buying mode, having purchased equities worth ₹101.59 crore on Wednesday.
