Indian shares up as oil eases; Nifty derivatives expiry spurs volatility

Indian shares rebounded on Tuesday following a drop in oil prices, which hit a one-week low, while market volatility remained high as the first monthly Nifty 50 derivatives expiry approached under the new closing-auction system (CAS). Hariselvan Radhakrishnan, founder and CEO of HST Wealth, explained that "monthly expiry-related rollovers and positioning led to sharper-than-usual price swings, particularly during the final hour of trading."

The Nifty climbed 0.48% to 24,334.55, and the BSE Sensex gained 0.37% to 77,656.09, both up 0.2% ahead of the closing auction. Rajesh Singla, CEO and fund manager at Alpha AMC and Planify, noted that "the early sessions (under CAS) saw teething issues, including the gap between regular close and auction-determined close on August 3, which understandably unsettled traders." The real challenge will be during the next MSCI rebalancing on August 31, analysts said.

Crude oil prices declined 3.2% to $89.20 per barrel as traders disregarded the latest U.S. sanctions campaign against Iran. Despite this, the market found short-term relief from Washington's shift from military escalation to economic sanctions, with analysts emphasizing that oil's trajectory in upcoming sessions will be crucial for global equities. Out of the 16 major sectors, 12 recorded gains. Small-caps faced a slight decline of 0.1%, while mid-caps rose by 0.5%.

Financials and IT stocks rose by 0.3% and 0.6%, respectively, reversing their losses during the final hour of trade. Hindustan Copper suffered a 7.2% drop after the government proposed to sell up to a 6% stake in the company at a 10.5% discount to its last closing price. Federal Bank and Jana Small Finance Bank both fell by around 3% and 1.9%, respectively, following a CNBC-TV18 report that Jana's promoter might sell its entire 16.9% stake to Federal Bank.

Federal Bank confirmed to exchanges that there was no significant event necessitating disclosure in connection with the report.