Indian shares extend drop on oil surge; Infosys, IndiGo results awaited

Indian shares extended losses on Thursday as escalating Middle East tensions pushed oil prices above $98 a barrel, hurting global risk appetite.

High oil prices pose a key risk for India, the world’s third-largest crude importer and consumer, by threatening tostoke inflation, widen India’s trade gap, squeezing growth and companies’ profit margins.

A 1.4% drop in drugmaker Dr Reddy’s Laboratories, 1.6% fall in Cipla and a 2.5% slide in  oil marketing company HPCL due to weak quarterly results weighed on markets.

The benchmark Nifty 50 fell 0.53% to 23,869.60, while the BSE Sensex shed 0.47% to 76,391.39, both logging their fourth straight session of losses, the longest declining streak in seven weeks.

Fifteen of the 16 major sectors fell. The broader small-caps and mid-caps dropped 1% each.

“The key question for markets is whether the recent escalation represents a temporary bout of geopolitical posturing or the start of a more prolonged conflict between U.S. and Iran,” said Mitesh Jain, head of broking at Sanctum Wealth.

“While markets are likely to look through a temporary spike in oil prices, a sustained rise above $100 per barrel would pose a meaningful risk to growth, inflation and market performance.”

Private lender IndusInd Bank lost 6% despite a jump in June quarter profit on lower provisions, as investors booked profits. The stock had surged 7.2% in six sessions in the run-up to results.

IT firm Infosys fell 0.5% and airline operator IndiGo lost 1.8%, ahead of their quarterly results due later in the day.

SpiceJet jumped 10% after a Reuters report said Adani Group may launch an airline, fueling acquisition buzz. Reports also cited a Gulf airline conducting due diligence to evaluate the potential acquisition of SpiceJet.