Sensex, Nifty pare losses but remain in red; here's what analysts say

Indian equity benchmarks trimmed more than half of their losses during afternoon trading on Monday, although both indices remained in the red. Investors remained cautious as oil prices rose, with fading hopes of a US-Iran peace breakthrough and slower tanker traffic through the Strait of Hormuz adding to geopolitical risk concerns.

At last check, the 30-share BSE Sensex pack was down 191.95 points or 0.25 per cent at 77,817.30, while the broader NSE Nifty50 index shed 35.10 points or 0.14 per cent to trade at 24,330.90.

Market expert Avinash Gorakshkar, in an interaction with Business Today, said, "Markets are now in an uncertain phase. We need to have a little more clarity on the geopolitical situation before the market starts recovering again. I think a sector-specific approach would be the right strategy, and the broader market offers better opportunity at present."

Ravi Singh, Chief Research Officer at Master Capital Services, said, "Nifty remains under pressure as elevated crude oil prices and continued Middle East tensions weigh on investor sentiment. Brent crude is hovering around $89 a barrel after gaining more than 5 per cent last week, keeping concerns over inflation and corporate margins alive. However, the recent market pattern offers some comfort. In the latter half of several sessions last week, the indices witnessed recovery from intraday lows, indicating that buying interest is still emerging at lower levels. If this trend continues, the Nifty could again attempt to recover during the second half of today’s session."

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "Crude trading at $89 per barrel, without any prospects for an immediate resolution to the crisis, is likely to cap any uptrend that may emerge."

"Nifty is being bogged down by the poor performance of the IT majors and the big banking names," he added.

"Investors should look beyond Nifty 50 for short-term gains. Plenty of stock-specific action is likely in the small-and mid-cap space. A significant trend from the Q1 results season is the big outperformance of the broader market. The outperformance of the SMIDs in Q1 is likely to continue for the rest of the year, too," Vijayakumar further stated.

Meanwhile, market breadth remained weak on BSE. Of the 4,538 stocks traded, 2,374 were declining, while 1,899 advanced and 265 stayed unchanged.