Stock market today: Sensex, Nifty 50 fall; geopolitical concerns, spike in crude oil prices weigh on sentiment

Stock market today: Domestic equity benchmarks the Sensex and the Nifty 50 ended in negative territory on Tuesday, January 2, on concerns over escalating geopolitical tensions and a significant jump in crude oil prices. Additionally, the market's high valuation appears to have led investors to secure profits before the onset of December quarter earnings.

According to media reports, US helicopters repelled an attack by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea.

"The naval battle underlines the risk of a regional escalation in fighting as Israel continues with its relentless bombing campaign following a Hamas surprise cross-border attack on Israeli towns on October 7. The Red Sea is the entry point for ships using the Suez Canal, which handles about 12 per cent of global trade and is vital for the movement of goods between Asia and Europe," reported Reuters.

The conflict in the Red Sea boosted oil prices as the chances of supply disruption grew. Crude oil benchmark Brent Crude traded 2.34 per cent higher near the $79 per barrel mark around 3:40 pm. 

The sharp surge in crude oil prices poses a threat to the Indian economy and could negatively impact stock market sentiment, given India's status as one of the leading importers of crude oil.

Apart from this, sharp gains in the key equity indices in the last two months have raised market valuation. As most positives are already factored in the market, investors took money off the table ahead of the December quarter earnings which is starting next week. IT companies are expected to report softer numbers for Q3FY24.

Sensex closed 379 points, or 0.53 per cent, lower at 71,892.48 while the Nifty 50 settled at 21,665.80, down 76 points, or 0.35 per cent.

BSE Midcap and Smallcap indices hit their fresh record highs of 37,193.29 and 43,196.17 respectively during the session but failed to hold gains and ended almost flat. The BSE Midcap index ended with a loss of 0.08 per cent while the Smallcap index lost 0.03 per cent.

Also Read: Why Indian stock market is down today? Experts list out these two reasons

Top Nifty 50 gainers today

Some 19 stocks ended with gains in the Nifty 50 index today.

Shares of Divi's Laboratories (up 3.09 per cent), Adani Ports and Special Economic Zone (up 2.97 per cent) and Sun Pharma (up 2.77 per cent) ended as the top gainers in the Nifty 50 index.

Top Nifty 50 losers today

Shares of Eicher Motors (down 3.57 per cent), Mahindra & Mahindra (down 2.48 per cent) and UltraTech Cement (down 2.47 per cent) ended as the top losers in the Nifty 50 pack.

Sectoral indices today

Among the sectoral indices, Nifty Auto (down 1.37 per cent), Private Bank (down 1.17 per cent), IT (down 1.16 per cent) and Realty (down 1.04 per cent) lost big.

Nifty Bank fell 0.98 per cent. On the other hand, Nifty Pharma jumped 2.46 per cent.

Experts' views on markets

"The market extended yesterday’s last hour’s selloff, taking negative cues from Asian peers due to weak Chinese manufacturing data and mounting tensions in the Red Sea, which has the potential to disrupt global trade and crude supplies. Ahead of the impending results season, investors are adopting a profit-booking strategy. Auto stocks declined on below-expected volume numbers, while pharma stocks were the standout due to catch-up in the US economy," said Vinod Nair, Head of Research at Geojit Financial Services.

"The underperformance of the banking majors is largely weighing on the sentiment amid consolidation and a decisive close above 21,800 in Nifty would prompt the next leg of the up move. Meanwhile, we feel it is prudent to prefer defensive such as FMCG, and pharma and stay selective in others," said Ajit Mishra, SVP - Technical Research, Religare Broking.

Also Read: Froth overdone in midcaps, smallcaps, switch to largecaps, says Anish Tawakley of ICICI Prudential AMC

Technical views on Nifty 50

"A bearish candle has emerged on the daily Nifty chart, indicating a potential bearish trend in the near future. Sentiment is expected to stay bearish as long as it remains below 21,750. Any upward movement toward 21,750 could encounter selling pressure. However, a clear breakout above 21,750 could shift sentiment in favour of the bulls. Support is established at 21,500 on the lower end," said Rupak De, Senior Technical Analyst at LKP Securities.

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