Indian shares edge higher after selloff; oil, US rate worries cap gains

Indian shares rose on Wednesday after a recent slide, led by lenders and payment firms after the government’s fee on some UPI transactions boosted the sector.

Gains were capped by high oil prices as the Middle East conflict worsened and caution ahead of an expected U.S. Federal Reserve rate hike later in the day.

The Nifty 50 rose 0.43% to 23,217.6 and BSE Sensex added 0.45% to 74,336.45 points, respectively. They were up 0.46% and 0.40%, ahead of the closing auction.

Twelve of 16 major sectors logged gains. The broader small-caps slipped 0.2% and mid-caps were muted.

Banks, private banks, state-owned lenders, financials gained between 0.7% and 1.5%, respectively. Payments platform Paytm gained 3.5%.

“We view this as structurally positive, long-awaited monetisation event for UPI-heavy banks and third-party application providers in India’s UPI ecosystem,” said Kunal Shah, analyst at Citi Research.

The session’s gains come after the benchmarks lost over 1% each on Tuesday after sliding about 5% in the previous five weeks.

A flurry of initial public offerings, higher oil prices and a potential U.S. rate hike could continue to weigh on the market, traders said.

“If the Fed does raise rates, it would keep the dollar strong, push global bond yields higher, and tighten financial conditions worldwide, with emerging market currencies and capital flows likely to come under broader pressure,” said Vinit Bolinjkar, head of research at Ventura Securities

Brent crude traded at around $108 a barrel as supply risks intensified, ollowing Saudi Arabia’s suspension of oil loading at its Yanbu port and cuts to Europe shipments.

Among stocks, cash management companies Radiant Cash Management and CMS Info Systems jumped 6% and 3.3% on hopes of increased cash withdrawals due to charges on UPI transactions.

Saatvik Green Energy jumped 5.5% after securing an order worth over 10 billion rupees ($104.2 million).