Nifty slips 0.1% as bank weakness offsets gains in telecom and IT

Indian equities ended a cautious session with the Nifty broadly flat, as gains in a small group of large companies offset weakness in banks, consumer durables and materials. The immediate backdrop was a rise in crude prices after renewed US-Iran tensions, alongside higher US bond yields and a risk-off tone across parts of Asia.

The market's resilience also reflected the strength of domestic growth data. India's real GDP grew 7.8% year-on-year in the April-June 2026 quarter, above the 7.3% market estimate and the RBI's 7% forecast. That positive signal limited the downside, but did not fully offset concerns about imported inflation, funding costs and foreign selling.

ITC, Bharti Airtel, Adani Ports and HCL Technologies were among the reported large-stock gainers. Reports linked the rebound in ITC, Bharti Airtel and Adani Ports partly to the unwinding of sharp, index-related moves during the previous session's closing-auction activity. No fresh fundamental trigger was identified for Bharti Airtel's move. HCL Technologies helped support the IT segment, while the broader advance in technology shares provided some cushion to the benchmark.

Banks were a principal source of pressure. Market reports attributed part of the weakness to a reversal of the previous session's MSCI-related closing-auction flows, while higher global yields and elevated crude added to the pressure on financial stocks. SBI, Axis Bank, Bajaj Finance and Shriram Finance were cited among the laggards in intraday reports. The implication is that index performance remained dependent on a narrow set of gainers rather than a broad improvement in risk appetite.

Telecom and internet shares led the recorded sector performance, supported by Bharti Airtel and strength in related digital and technology names. FMCG and retail were firmer, with ITC a prominent contributor, while IT gained support from HCL Technologies and other technology stocks. Reports did not provide a separate company-specific catalyst for the weakness in consumer durables, banks or cement and materials; the stated explanations were the broader risk-off backdrop, higher oil and yields, and the unwinding of index-linked positioning.

The primary market remained active. Rays of Belief and Fly-Hi Maritime Travels opened for subscription, while ESDS Software Solution closed its issue. Hy-Tech Engineers made its market debut at a premium to the issue price. The available material also records an anchor-book mobilisation of more than Rs 50 crore for Rays of Belief before its public opening.

The available material does not confirm a September 1 block or bulk deal with sufficient details to report as a same-day transaction. It does record Augusta Investments II's sale of 35.38 lakh Northern Arc shares on August 31, reducing its holding from 16.02% to 13.83%; that transaction predates today's session.

Global markets supplied a negative starting point as renewed US-Iran military tensions pushed Brent above $90 a barrel and raised concerns about disruption to energy flows. US equities ended lower in the previous session, while Asian markets were mixed to weaker. The US 10-year Treasury yield was reported near its highest level since January 2025, reinforcing concern that tighter global financial conditions could keep pressure on emerging-market assets.

For India, the oil move matters through the import bill, inflation expectations and the rupee. The rupee was reported firmer at Rs 95.17 per US dollar, but the currency's near-term direction remains sensitive to crude and foreign portfolio flows. Higher global yields also increase the relative attraction of dollar assets and can weigh on rate-sensitive Indian sectors.

Foreign institutional investors were reported as net sellers of Rs 7,985.9 crore during the session, while domestic institutions bought Rs 4,588.9 crore. Domestic buying therefore absorbed part, but not all, of the foreign selling pressure. The contrast between strong GDP growth and continued foreign outflows suggests that global positioning remained an important influence on the close.

The main policy and macro signal was the combination of strong quarterly growth and a softer near-term manufacturing survey. MoSPI data showed real GDP growth of 7.8% year-on-year in Q1 FY27, with manufacturing growth of 9.2% and services growth of 10%. The RBI's repo rate was reported at 5.25% after its August 5 decision, and the growth surprise has led some analysts to discuss a higher risk of a rate increase later in the year.

The HSBC India Manufacturing PMI, compiled by S&P Global, fell to 52.8 in August from 53.5 in July and was slightly below the preliminary estimate of 52.9. The reading remained above 50, indicating expansion, but new orders grew at their slowest pace since August 2021 and factory employment declined for the first time in 30 months. Input-cost inflation eased to a six-month low, which may reduce some margin pressure, but the survey points to softer momentum than the GDP data alone suggests.

July IIP growth was reported at 6.7%, down from 8.8% in June, reflecting slower manufacturing, electricity and gas output and subdued mining activity. The available material does not report a new RBI, SEBI or finance ministry decision released during the session. It also does not provide a fresh CPI, GST or trade reading for September 1.

The corporate news flow was led by transactions and order visibility rather than a broad set of scheduled earnings. ITC Infotech agreed to acquire 22.106% of Happiest Minds Technologies from its promoter group, including founder Ashok Soota and Ashok Soota Medical Research LLP. The boards also approved a merger under which Happiest Minds shareholders would receive 25 ITC Infotech shares for every 81 Happiest Minds shares. The reported material does not include a market consensus valuation or an expected earnings impact for the transaction.

E2E Networks signed a binding term sheet valued at Rs 1,000 crore with an Indian sovereign AI company for NVIDIA Blackwell cloud GPUs and related services, with the contract running until June 2029. NCC reported three Buildings Division orders worth Rs 430.19 crore, excluding GST, during August. Marine Electricals reported orders of approximately Rs 398.81 crore for power-distribution systems. These announcements improve disclosed order visibility, although the available material does not give revenue or margin guidance against which to assess their financial contribution.

Milky Mist reported first-quarter net profit of Rs 64.68 crore, up 890% year-on-year, on revenue growth of 43.6%; the company said the increase was driven by a 153% rise in yogurt sales. PVR INOX approved a Rs 300 crore buyback. Kotak Mahindra Bank submitted Anup Saha and Paritosh Kashyap as candidates for chief executive to the RBI, ahead of Ashok Vaswani's term ending on December 31, 2026. The available material does not identify notable results due after the session.

The next session will be shaped by whether crude remains elevated and whether foreign selling continues. Domestically, investors will weigh the strong Q1 FY27 GDP print against the softer August manufacturing PMI and July IIP data. The interaction between those signals, global bond yields and bank-sector positioning is likely to matter more than the flat headline close itself.