Indian shares trim losses on foreign inflow hopes; IT sinks, oil surges

Indian shares pared some of their intraday losses on Wednesday on reports of likely government measures to stem the rupee’s slide, attract foreign bond investors, and review the long-term capital gains tax.

However, a pullback in IT stocks after a recent rally and rising oil prices kept markets in the negative territory.

The Nifty 50 closed 0.33% lower at 23,405.6, while the BSE Sensex lost 0.41% to 74,346.17. The benchmarks had dropped about 1.5% intraday.

“The late recovery was driven by short covering after reports about tax cuts for foreign bond investors. This led to anticipation about similar steps for equity markets,” said Kranthi Bathini, director of equity strategy at Wealthmills Securities.

India’s limited exposure to direct AI beneficiaries and elevated oil prices have propelled foreign outflows worth record $26.8 billion from the country’s stocks this year.

The benchmarks have dropped in five of the last six trading sessions, with Tuesday’s session being the only break.

Brent crude rose about 3% to $99 a barrel on Wednesday as Gulf hostilities flared and diplomacy between Washington and Tehran showed little progress.

Higher oil prices weigh on current account, economic growth and trigger inflationary pressures on India, the world’s third-largest crude importer.

Seven of the 16 major sectors declined.

The broader small-caps and mid-caps fell 0.1% and 0.4%, respectively.

The IT index lost 5.6% in its worst session in four months, unwinding part of a 7.6% three-day rally as investors weighed AI-led disruption and a muted earnings outlook against cheaper valuations. The sub-index has dropped 22.4% so far in 2026.

TCS fell 8.4%, while Infosys and HCLTech slid 3.8% and 5.3%, respectively.

Investors now await the Reserve Bank of India’s policy decision on Friday.

The central bank is expected to keep its key rate steady at 5.25%, while signalling a possible hawkish shift due to inflation pressures and weakness in rupee.