Nifty plunges to five-month low as oil surge hits financials

The Nifty 50 index fell sharply on Tuesday, marking its steepest one-day loss in over four months as investors reassessed their positions amid mounting external headwinds. The decline was particularly pronounced in the financial sector, with both bank stocks and non-bank finance companies emerging as key pressure points during the session. Analysts attributed the broad-based sell-off to renewed concerns over crude oil's trajectory and its potential impact on India's import bill and inflation trajectory.

Brent crude oil futures have climbed toward the $105-per-barrel level, raising fresh apprehensions about energy costs and their downstream effects on corporate profitability. Higher oil prices typically translate into elevated inflation, which could complicate the Reserve Bank of India's policy stance and limit room for interest rate relief in coming quarters.

Financial stocks bore the brunt of the selling pressure, with the Nifty Bank index and broader NBFC stocks witnessing sustained outflows. The sector's sensitivity to interest rates and economic growth has made it vulnerable to shifts in macroeconomic sentiment, particularly when external cost pressures mount.

Market participants noted that the combination of rising commodity prices and financial sector weakness suggests investors are recalibrating their risk exposure amid persistent global uncertainties. The sharp pullback represents a significant reversal from recent gains and underscores the volatility that has characterised equity markets in recent weeks.