Mumbai, Aug 18 — Domestic equity benchmarks traded lower in early deals on Tuesday as a spike in crude oil prices above $91 a barrel weighed on investor sentiment amid fading hopes of the US-Iran peace deal.
In the morning trade, Sensex declined 365 points or 0.47 per cent to 77,362, hitting an intraday low. While Nifty traded 76 points or 0.31 per cent lower at 24,211.
Sector-wise, Nifty IT was top loser and slumped more than 1 per cent. Meanwhile, Nifty MidSmall IT & Telecom fell 0.62 per cent, while Nifty Realty declined 0.4 per cent.
Similarly, financial services, private banks, media, metals and FMCG indices also traded marginally lower. On the other hand, Nifty Auto gained 0.40 per cent, PSU Bank rose 0.29 per cent.
Ahead of market opening, analysts said the rise in Brent crude and the increase in US 10-year Treasury yields likely weigh on equities in the near term.
The US 10-year bond yield has risen to 4.73 per cent, which could be negative for foreign institutional investor flows, they said.
However, analysts noted that a resilient Indian economy and signs of an earnings growth turnaround could provide support to domestic equities.
They further stated that domestic institutional investors which have substantial funds, could step in to buy significant dips, while retail investors may use market declines to gradually accumulate quality stocks for the long term. However, heightened geopolitical is likely to keep markets volatile.
The selling in the markets came after reports highlighted Iran's indication that it could adopt a more offensive posture and US President Donald Trump's ruling out an extension to the ceasefire arrangement have intensified concerns over potential disruptions to energy supplies.
After that, Brent crude -- the international oil benchmark -- rose 0.60 per cent from the previous close to trade above $91 a barrel, while US West Texas Intermediate crude also gained more than 1 per cent to $85.37 a barrel.