Indian shares end lower as higher oil prices, foreign outflows dent appetite

Indian equity markets slipped on Wednesday amid rising oil prices and ongoing foreign outflows dampening investor appetite, following a brief rally the previous day. By the close, the Nifty 50 dropped 0.44% to 22,622.70, while the BSE Sensex fell 0.34% to 72,781.89. Of the 16 major sectors, eight experienced losses, with the smaller-cap and mid-cap indices declining 0.3% and 0.1%, respectively.

The broader IT index, which had risen 5.2% on Tuesday, gained a further 1.1% on the day. Oil prices surged to $106 a barrel following attacks on two tankers in the Strait of Hormuz, heightening supply worries. Iranian officials announced new measures targeting ships. Analysts noted that market movements would hinge on global risk sentiment, currency fluctuations, crude oil prices, and corporate earnings momentum.

Investors were now focusing on a forthcoming US inflation report, which could provide hints about the Federal Reserve's rate policy. Higher US interest rates typically weaken the outlook for emerging markets like India for foreign investors. Foreign portfolio investors continued their losing streak, with a 13-session stretch, resulting in year-to-date outflows totaling a record $32.52 billion.

While domestic institutional investors help sustain market resilience, continued outflows may not be enough to sustain broad-based rallies, according to a research head at Ventura. Notable individual performances included a 5.7% rise in Tata Elxsi, after it reported higher quarterly profits, and Bank of Baroda falling 4% following a $15 billion lawsuit filed by UAE businessman BR Shetty against the state-owned lender.