Nifty falls 1.19% as oil, yields and Fed uncertainty overwhelm IT gains

Indian equities opened higher but reversed as concerns over oil supply, global bond yields and the US Federal Reserve's policy decision outweighed gains in information-technology shares. The sell-off broadened into banks, real estate, defence, metals and mid- and small-cap stocks.

Market participants attributed the pressure to Brent crude remaining above $107 a barrel, a weaker rupee and the rise in US Treasury yields. The US 10-year yield briefly crossed 5% before the Fed's decision due later on September 16, raising concern that higher global rates could persist for longer.

The session also coincided with continued foreign selling and an increase in volatility around the derivatives expiry and closing-auction framework. SEBI was reported to be reviewing the recently implemented closing-price mechanism after concerns over erratic expiry-day moves.

Information-technology stocks were the principal offset to the broader decline. HCL Technologies, Infosys, Tata Consultancy Services, Tech Mahindra and Wipro gained as comments from OpenAI and Anthropic leadership calling for a more measured pace of artificial-intelligence development eased some concerns about rapid AI-led disruption, according to market reports.

Bharat Electronics was among the major drags after defence stocks came under selling pressure. Shriram Finance, Adani Enterprises, InterGlobe Aviation and Grasim Industries were also listed among the leading laggards. HDFC Bank limited the benchmark's fall, although the available material does not give a company-specific reason for its relative strength.

The weakness in consumer durables, cement and materials, and infrastructure and industrial shares was consistent with the wider risk-off move. Higher yields raise the financing burden for rate-sensitive and capital-intensive businesses, while elevated crude increases cost and inflation risks. The available material does not identify separate company-specific triggers for the sector declines.

The latest inflation data added to the policy sensitivity. Consumer-price inflation rose to 4.82% year-on-year in August from 4.45% in July, while food inflation rose to 5.95% from 5.52%, according to government data cited in market reports. SBI Research said inflation could cross 6.5% in the coming months and argued for two 25-basis-point rate increases at the October and December meetings; that is a research view, not an RBI decision.

The Finance Ministry notified that banks and payment-system providers cannot levy charges on UPI transactions up to Rs 2,000 or on RuPay debit-card payments. NPCI subsequently held discussions on a 0.4% merchant fee for UPI transactions above Rs 2,000. The measure is relevant to payment companies and banks because it changes the economics of higher-value merchant transactions, although the market impact remains company-specific.

The RBI has planned open-market sales of Rs 1 lakh crore, including Rs 5,000 crore on September 16 and Rs 2,500 crore each on September 21 and September 28, according to reports. Bond yields rose as the planned sales added to supply concerns at a time of higher global yields. The RBI also filed a caveat in the Bombay High Court ahead of an anticipated appeal by Tata Sons seeking exemption from mandatory listing norms.

US equities closed lower for a second session as oil prices and Treasury yields rose ahead of the Federal Reserve decision. Asian markets were mixed in early trade: Japan's Nikkei declined while the Topix gained, South Korea was broadly flat, and Australia's ASX 200 advanced.

The global backdrop matters for India through three channels. Higher oil prices raise the import bill and inflation risk; higher US yields reduce the relative appeal of emerging-market assets; and a firmer dollar adds pressure to the rupee. Foreign institutional investors were net sellers of Rs 2,977.86 crore in Indian equities on September 15, while domestic institutional investors bought Rs 2,686.05 crore, providing only a partial offset.

India's overall exports, including goods and services, rose 25.41% year-on-year to $82.68 billion in August, while imports rose to $92.09 billion. The resulting trade deficit narrowed to $9.41 billion from $11.62 billion a year earlier. Merchandise exports rose 26.12% in dollar terms, while services exports increased 24.61%.

The trade data provide some external-sector support as the rupee faces pressure from higher oil prices and dollar demand. That support is partly offset by the larger import bill associated with energy costs. The material available for this report does not include a new IIP or PMI release before the September 16 open.

Solar Industries fell after investors focused on the proposed Rs 12,951 crore acquisition of South Africa's Omnia Holdings. The company's chief executive said there would be no equity dilution, according to market reports, but the announcement nevertheless remained a stock-specific source of uncertainty.

Authum Investment and Infrastructure sold 1.73% of Welspun Enterprises' paid-up equity for Rs 183.8 crore at an average price of Rs 765 a share. Fidelity Securities Fund bought 1.38% for Rs 147.15 crore at Rs 765 a share. Welspun Enterprises shares declined amid the transaction and broader pressure on infrastructure stocks.

No major results or fresh management-guidance update with an expectation-versus-report comparison was available in the material reviewed for the September 16 open.

The Federal Reserve's policy decision and Chair Kevin Warsh's media conference are the immediate global events for Indian markets. Participants will focus on whether the combination of higher oil prices and inflation pressures changes the expected path of US rates.

Domestically, the scheduled RBI bond sale, movements in the rupee and crude, and the response to the latest inflation data will shape the rate-sensitive parts of the market. The IPO calendar also remains active, with Hero Motors opening for subscription and Manika Plastech closing its issue.