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

Indian shares dipped on Tuesday, driven by surging oil prices and bond yields, as well as geopolitical tensions in the Middle East. The Nifty 50 fell 0.1% to 24,055.8, and the BSE Sensex slipped 0.02% to 76,944.28. These indexes had lost 0.4% and 0.3%, respectively, at 3:15 p.m. IST before the closing auction session (CAS).

Reliance Industries managed to extend its gains to 2.5%, up from 2% ahead of the CAS window. However, ICICI Bank saw a slight recovery, with losses narrowing to 1.1% from 1.8% before the CAS. Twelve out of the 16 major sectors experienced losses on Tuesday.

Banking stocks were the worst performers, with the broader bank index falling 1.1%, reversing a 500-point gain seen in the CAS on Monday. Small- and mid-cap stocks also lagged, with the former down 0.2% and the latter 1.4%.

Global bond yields and oil prices surged due to concerns over oil-fueled inflation, monetary tightening, and deteriorating fiscal conditions. Brent crude futures rose 2% to over $92 per barrel following renewed fighting between the U.S. and Iran. Foreign investments in Indian stocks hit a 23-month high in August, according to depository data.

Sunny Agrawal, head of fundamental equity research at SBICAPS Securities, noted that the challenges facing the Indian market are mainly global in nature, as investors keep a close eye on crude oil price movements. Domestic factors, such as the implementation of CAS and a strong pipeline of Initial Public Offerings (IPOs), are also affecting secondary markets, despite the robust performance of the economy. In April-June, India's economy expanded 7.8% year-on-year, exceeding expectations.