Sensex, Nifty trade firm in mid-session; crude prices, geopolitical tensions keep risk appetite subdued

The Indian benchmark indices opened uneven on Thursday, following several days of declines. The Sensex slipped 22 points to 74,742, while the Nifty 50 managed a slight gain of 15 points, closing at 24,447. Other market segments showed mixed performances, with Nifty Midcap 100 underperforming and Nifty Smallcap 100 outperforming.

Specific company stocks saw varied results, with M&M and Adani Ports shares dropping around 1%, whereas Axis Bank, SBI, and ITC shares increased by nearly 1%. The market breadth turned positive, with more stocks rising than falling, and 125 stocks remaining unchanged.

Experts worry that if oil prices remain above $100 for an extended period, it could negatively affect India's GDP growth this year, impacting corporate earnings, according to V K Vijayakumar, Chief Investment Strategist at Geojit Investments. Sectors like aviation, paints, adhesives, tyres, and chemicals, which are sensitive to crude oil prices, may suffer the most.

On the other hand, defensive sectors such as FMCG, pharmaceuticals, and healthcare, which have inelastic demand, are expected to remain relatively resilient. Growth sectors like digital platform companies and banking stocks, despite being technically weak, are considered fundamentally strong, with a favorable risk-reward ratio for long-term investors.

Technical analysts at Geojit Investments note that Nifty's recent recovery attempts have been brief and have only fueled downside momentum. The next support level for Nifty is at 23,260-23,000, with the upside marker now at 23,520. Meanwhile, the VIX, a measure of market volatility, is still below 12 but is rising quickly, potentially reaching its highest volatility levels seen in August.