Indian shares edge lower on higher crude prices, bond yields; banks, autos lead losses

Indian shares edged lower on Tuesday as escalating Middle East tensions pushed oil prices and bond yields higher, while heavyweight banks reversed Monday’s closing auction gains.

The Nifty 50 fell 0.1% to 24,055.8 and the BSE Sensex shed 0.02% to 76,944.28.

The indexes were down 0.4% and 0.3%, respectively, at 3:15 p.m. IST ahead of the beginning of closing auction session (CAS).

Heavyweights Reliance Industries extended gains to 2.5% from 2% ahead of CAS window, while ICICI Bank pared losses to 1.1% as against 1.8% before CAS.

Twelve of the 16 major sectors logged losses. Bank index fell 1.1%, reversing the roughly 500-point gain it recorded in the CAS on Monday.

The broader small-caps and mid-caps lost 0.2% and 1.4%, respectively.

Global bond yields and oil prices jumped as traders fret about oil-driven inflation, monetary tightening and worsening fiscal conditions.

Brent crude futures jumped 2% to over $92 per barrel after renewed fighting between U.S. and Iran.

Foreign buying in Indian stocks hits 23-month high in August, depository data shows

“The challenges (for Indian market) are more global in nature, with investors watching movement in crude oil prices,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

Agrawal added that domestic factors like implementation of CAS and a strong IPO pipeline are also keeping the secondary markets in check, even though the economy is doing well.

India’s economy grew 7.8% year-on-year in the April-June quarter, surpassing forecasts, data released on Monday showed.

Reliance Industries jumped 2.5% after Jefferies raised its price target, citing higher refining earnings.

Kotak Mahindra Bank rose 1.3%, bucking losses among banks, after Reuters reported the lender had recommended two insiders for CEO.

Maruti Suzuki slumped 4.4% after August sales fell from July. The auto index lost 1.2%.

Happiest Minds fell 10.9% after ITC said its IT unit would buy a 22.1% stake in the software services provider. ITC gained 4.3%.