Markets trade flat in early deals amid sharp fall in crude oil prices

Indian equity benchmarks made slightly positive start on Wednesday tracking overnight fall in crude oil prices on demand concerns. Soon, markets turned volatile and struggling for direction amid mixed cues from Asian counterparts as traders seemed reluctant to make significant moves and will pay close attention to the Powell's statements for clues about the outlook for interest rates. At this point of trade, domestic indices are trading flat with Sensex down over 11 points, while Nifty up over 22 points. 

Some support came in as Crisil Ratings said the ongoing conflict in the Middle East, confined mainly to the Gaza region now, has caused only negligible disruption in India's trade so far, and added that the Indian companies were not in the crosshairs for now. However, foreign fund outflows dented sentiments. according to the provisional data available on the NSE, foreign institutional investors (FII) offloaded shares worth net Rs 497.21 crore on November 7, 2023.

On the sectoral front, aviation industry stocks are in focus as the central government is framing a policy to transform the country’s airports into global hubs that would offer single-point international connectivity to Asia. In stock specific development, SJVN rallied on receiving a letter of intent for purchase of 200 MW solar power from Uttarakhand Power Corporation.

The BSE Sensex is currently trading at 64930.74, down by 11.66 points or 0.02% after trading in a range of 64895.74 and 65124.00. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.60%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.95%, Healthcare up by 0.79%, Energy up by 0.69%, Industrials up by 0.62% and Realty up by 0.60%, while Bankex down by 0.29% was the sole losing index on BSE.

The top gainers on the Sensex were Asian Paints up by 1.23%, Larsen & Toubro up by 0.56%, Titan Company up by 0.55%, Wipro up by 0.44% and TCS up by 0.42%. On the flip side, ICICI Bank down by 0.88%, Tata Steel down by 0.50%, Kotak Mahindra Bank down by 0.45%, NTPC down by 0.44% and Mahindra & Mahindra down by 0.34% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that the ongoing conflict in the Middle East, confined mainly to the Gaza region now, has caused only negligible disruption in India's trade so far, and implied that the Indian companies were not in the crosshairs for now. It also said some sectors such as fertilisers and diamonds -- both cut and polished -- may see a slight, but manageable, impact, while for most others impact will be insignificant.

However, the conflict has driven up prices of gold and crude oil. It noted ‘Their trajectories will bear watching, especially crude oil, given India's high dependence on its import. Also, elevated crude oil prices have a cascading impact on a host of other sectors that consume the oil itself or linked raw materials’. India's trade with Israel is relatively low, accounting for 1.9 per cent of total exports and 0.3 per cent of total imports last fiscal. The merchandise exports mainly comprise polished diamonds and petroleum products, including refined hydrocarbons, while imports largely comprise industrial equipment, fertilizers, rough diamonds and precious stones.

For domestic diamond polishers, Israel is primarily a trading hub. Exports to the country were 5 per cent of total diamond exports from India last fiscal. Additionally, 2 per cent of all roughs imported are from Israel. Polishers also have alternative trading hubs, such as Belgium and the United Arab Emirates, with ultimate customers based in the US and Europe. Israel is a major global producer of muriate of potash (MoP) and among the top three countries that India imports from, accounting for 25 per cent of all MoP imports last fiscal. However, the share of MoP (as a final product or as an ingredient in other fertilisers) remains low at 10 per cent of domestic fertiliser consumption.

Crisil said India's ability to source from other countries lowers the supply risk. The Crisil report, however, cautioned that any spillover of the conflict to nearby oil producing and exporting regions could result in supply-related constraints and spiralling prices of crude oil. Within a week of the conflict, crude oil prices rose 4 per cent to $90 per barrel but have stabilised a tad lower thereafter. A sharp rise in crude oil prices will impact linked sectors in India, such as aviation, automotives, paints, tyres, cement, chemicals, synthetic textiles and flexible packaging.

The CNX Nifty is currently trading at 19429.55, up by 22.85 points or 0.12% after trading in a range of 19403.85 and 19455.70. There were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were BPCL up by 2.87%, Cipla up by 1.47%, Dr. Reddy's Lab up by 1.33%, Adani Ports & SEZ up by 1.25% and Asian Paints up by 1.21%. On the flip side, ICICI Bank down by 0.73%, NTPC down by 0.50%, Kotak Mahindra Bank down by 0.41%, Bajaj Finance down by 0.29% and HDFC Life Insurance down by 0.27% were the top losers.

Asian markets are trading mixed; Nikkei 225 slipped 87.53 points or 0.27% to 32,184.29, Jakarta Composite declined 50.88 points or 0.74% to 6,792.91, Straits Times fell 44.78 points or 1.41% to 3,129.03 and KOSPI was down by 8.37 points or 0.34% to 2,435.59. However, Taiwan Weighted rose 45.16 points or 0.27% to 16,730.11, Hang Seng added 8.2 points or 0.05% to 17,678.36 and Shanghai Composite was up by 1.6 points or 0.05% to 3,058.87.