Stock markets close lower as weak rupee, inflation fears after fuel price hike weigh on sentiment

The 30-share BSE Sensex dropped 160.73 points, or 0.21%, to settle at 75,237.99, after swinging between gains and losses during the session. The benchmark had rallied nearly 470 points in early trade before losing momentum.

Mumbai: Benchmark equity indices Sensex and Nifty surrendered early gains to close lower on Friday due to selling in metal, oil & gas and PSU bank shares and caution among investors amid surging crude oil prices.

The 30-share BSE Sensex dropped 160.73 points, or 0.21 per cent, to settle at 75,237.99, after swinging between gains and losses during the session. The benchmark had rallied nearly 470 points in early trade before losing momentum.

The 50-share NSE Nifty settled lower by 46.10 points, or 0.19 per cent, at 23,643.50, snapping its two-day gaining streak.

Tata Steel, State Bank of India, Eternal, Reliance Industries, UltraTech Cement, Mahindra & Mahindra, Bharat Electronics Ltd, Larsen & Toubro, Trent, Axis Bank and Asian Paints were the major laggards among Sensex stocks.

On the other hand, Infosys, Tech Mahindra, PowerGrid, Adani Ports, Maruti Suzuki India, Bharti Airtel, Kotak Mahindra Bank, Hindustan Unilever, and Sun Pharmaceuticals were major winners.

"Investors have turned cautious post the recent relief rally, with rising bond yields, a weaker rupee, and fresh fuel price hikes reviving inflation concerns," Vinod Nair, Head of Research, Geojit Investments Ltd, said.

Favourable valuations and a solid Q4 earnings print are cushioning the downside. Focus has shifted to potential fiscal and monetary measures to defend the rupee and stabilise the Balance of Payment, he added.

"Globally, surging yields have paused the AI-led rally. Near-term direction is likely to be driven by geopolitical developments -- specifically, any progress on reopening the Strait of Hormuz, with the Trump-Xi meeting positioned as the key catalyst," Nair said.

The rupee crashed below the 96 mark against the US dollar on Friday for the first time as elevated crude oil prices and inflation concerns weighed on the local unit. The local currency closed at a record low of 95.94 (provisional) against the US dollar later.

Oil marketing companies raised petrol and diesel prices by Rs 3 per litre each on Friday, to pass on part of the hit from surging global crude prices triggered by the Iran war. CNG prices in cities like Delhi and Mumbai were raised by Rs 2 per kg, raising fears of a spike in inflation.

Brent crude climbed more than 3 per cent to $109.23 per barrel.

Meanwhile, the country's exports in April rose by 13.78 per cent to $43.56 billion despite global challenges, Commerce Secretary Rajesh Agrawal said. Imports grew by 10 per cent year-on-year to $71.94 billion in April. Trade deficit during the month stood at $28.38 billion.

Asian markets ended broadly lower, with South Korea's Kospi tumbling over 6 per cent. Markets in Europe were trading lower. US markets ended higher on Thursday.

Foreign Institutional Investors (FIIs) bought equities worth Rs 187.46 crore on Thursday, and Domestic Institutional Investors (DIIs) purchased stocks for Rs 684.33 crore, according to exchange data.

On Thursday, the 30-share BSE Sensex jumped 789.74 points to close at 75,398.72. The 50-share NSE Nifty climbed 277 points to finish at 23,689.60.