Indian markets fall as Brent crude nears $100; IPOs drain liquidity

Indian markets continued their decline with Sensex and Nifty falling as Brent crude approached USD 100. An expert highlights dual pressures: rising oil prices and a booming IPO market draining liquidity, with the latter having a greater impact.

Market Headwinds: Oil Prices and IPO Frenzy

Indian markets continued their red streak at the opening bell as Brent crude reached near USD 100 amid rising geopolitical tensions in West Asia. The BSE Sensex declined 456.78 points, or 0.60 per cent, to stand at 75,120.80, while the NSE Nifty 50 dropped 119.65 points, or 0.51 per cent, to trade at 23,515.45.

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, pointed to dual domestic and international pressures shaping trading sentiment. “Two strong headwinds are impacting the market now. One, Brent crude around USD 100 amid escalating US-Iran tensions is weighing on the economy. Two, the booming IPO market is sucking liquidity out of the market, resulting in a sustained downtrend in the Nifty. Perhaps, the latter is impacting the market more than the former. The listing gains from IPOs, which have increased to about 22% since June, are driving investors- both retail and institutional- into the IPO market. This is understandable since Nifty return YTD is negative 9.5%,” said Vijayakumar.

At the time of reporting, Brent Crude rose by USD 1.40 (+1.43%) to USD 99.32 per barrel, while WTI Crude Oil gained USD 1.23 (+1.33%) to reach USD 94.26 per barrel. Gold also strengthened, climbing USD 22.06 (+0.51%) to trade at USD 4,377.86.

Expert's Take on IPO Boom

“Even FIIs who have sold equity for Rs 284000 crores through the exchanges so far this year have put in about Rs 36000 crores in IPOs so far this year. Everyone is riding the momentum in the IPO market. This frenzy has pushed up the IPO valuations, too,” Vijayakumar noted He pointed out that IPOs are getting subscribed irrespective of valuations, mentioning that investors have to be discreet while applying for IPOs.

Investment Strategy Amid Market Volatility

Vijayakumar advised market participants to maintain selectivity rather than chasing speculative momentum. “There are good and reasonably-priced IPOs. Investors can apply for these. But instead of blindly applying for all IPOs driven by FOMO, investors can now accumulate fairly-valued stocks, particularly large-caps in growth sectors. Investing in these segments and waiting patiently will reward investors handsomely while many IPOs run the risk of going below the issue price. Discretionary is the better part of FOMO,” said Vijayakumar.

Technical Outlook and Global Cues

Rajesh Palviya, Head of Research at Axis Direct, noted that technical indicators reflect a cautious market structure after the benchmark index settled at multi-month lows in the preceding session. “Persistent concerns over elevated crude prices and escalating Middle East tensions continued to weigh on risk appetite. Global cues also remained cautious… as investors balanced geopolitical risks against upcoming US inflation data,” Palviya said.

At the time of reporting, Dow Jones Futures traded marginally lower at 52,755.88, dropping 30.19 points (-0.06%). The S&P 500 recorded a loss of 45.08 points (-0.58%) to trade at 7,673.52, while the Nasdaq fell 85.58 points (-0.32%) to sit at 26,421.41.

Key Support and Resistance Levels

Highlighting key support zones, Palviya said: “Technically, the undertone remains fragile below 23,800. Immediate support is placed at 23,500–23,450, followed by 23,300, while 23,800–23,850 remains the first resistance zone. A decisive reclaim of 24,000 would provide meaningful relief and improve sentiment.”

He added that for now, market direction will remain closely tied to crude oil prices and developments in West Asia; any moderation on either front could trigger a stabilisation and a recovery in equities. (ANI)

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