Indian shares fall as IT drags; oil slides ahead of potential US-Iran talks

Indian equities declined on Tuesday, with information technology stocks leading the downturn as concerns over demand and earnings took hold. This dragged down the broader market, which in turn offset the positive impact from falling oil prices for the fifth consecutive day prior to potential US-Iran talks at the UN General Assembly that week.

The Nifty 50 slipped 0.36% to 23,329 points, while the BSE Sensex dropped 0.44% to 74,529.08 points. As the trading day neared its end and the NSE's weekly derivatives expiration approached, the Nifty was down 0.28% and the Sensex fell 0.27%. Industry experts noted that the regulator's proposed changes to derivatives settlement aimed at reducing volatility during expiry days could prove beneficial.

According to Nilesh Sharma, executive director and president at SAMCO Securities, while the intentions behind the Capital Adequacy Standard (CAS) are sound, its implementation is still lagging behind market readiness. Of the 16 major sectors, 14 experienced declines. Small- and mid-cap stocks also underperformed, sliding 0.2% and 0.1%, respectively.

The IT index dropped 0.9%, weighed down by CLSA and Goldman Sachs' warnings about subdued demand and an uncertain outlook for medium-term earnings. Market volatility returned after an initial recovery attempt, as selling intensified at higher levels, according to Vikram Kasat, chief business officer at PL Capital. Foreign capital outflows and geopolitical uncertainties continued to weigh on investor sentiment, highlighting concerns about inflation and rising import costs.

Brent crude futures experienced a 1.5% decline to $98.9 per barrel, reversing an earlier 2% rise after a report from Japanese news agency Kyodo indicated Iran had offered to reopen the Strait of Hormuz within seven days if the US eased military pressure, signaling a push for diplomacy. Although Iran and the US exchanged threats over the weekend, President Donald Trump expressed openness to meeting Iranian President Masoud Pezeshkian, who is scheduled to attend the UN General Assembly in New York.

Notable among the stocks, Coal India rose 3.2% following an upgrade from Morgan Stanley to "overweight" from "equal-weight."