Indian benchmark shares subdued after recent drop as oil worries outweigh banking gains

Indian benchmark equities were subdued on Thursday, with the Nifty closing largely flat as risk aversion sparked by elevated oil prices outweighed gains in banking stocks following the central bank’s stronger-than-expected dollar mobilisation.

The BSE Sensex plunged as much as 2.5% during the closing auction, with the index extending losses on weekly derivatives expiry as volatility during the closing auction intensified.

The Nifty 50 fell 0.17% to 23,873.45 and the Sensex shed 0.55% to 76,152.86 at the close.

The Nifty and Sensex were down 0.04% and 0.02%, ahead of the closing auction session.

The closing auction session is already reshaping options trading, prompting participants to trim positions and ramp up hedges as wild swings in the final 15 minutes make closing levels increasingly difficult to call.

The benchmarks had lost about 1% each over the past three sessions, pressured by climbing crude prices and rising global bond yields.

Brent crude rose 1% to $96.6 a barrel after renewed military strikes between the U.S. and Iran intensified inflationary, energy supply worries.

Nine of the 16 major sectors declined. Banks, financials, private lenders and state-owned banks climbed between 0.3% and 0.6%.

Banks mobilized more than $60 billion in deposits from non-resident Indians during the final 10 days of the RBI’s swap scheme, taking total inflows to $136 billion.

“These inflows bolster bank liquidity, opening more runway for credit growth across the system as we head to the festive season,” said Kranthi Bathini, director of equity strategy at Wealthmills Securities.

“However, benchmark indices remain range-bound despite the domestic growth data and the liquidity boost as crude remains the joker in the pack for inflation, global bond yields and the durability of domestic demand,” Bathini said.

Small-caps and mid-caps gained 1.2% and 0.4%, buoyed by earnings visibility, domestic inflows and diversification.

Consumer company Godrej Consumer fell 2.8% after multiple brokerages projected near-term pressure due to sustained palm oil inflation.

IT company Hexaware fell 2.1% after its CEO’s exit spurred concerns over the growth outlook.