Indian equities open the week after a flat close as oil and yields keep risk appetite subdued

Indian equities enter Monday with a narrow base after a volatile session in which selective buying in power, metals, realty and financials offset pressure on technology, automobiles and healthcare. Reports attributed the caution to elevated crude prices, geopolitical uncertainty and higher international bond yields rather than to a fresh domestic shock.

The immediate setup remains balanced. Asian markets were mixed to lower in early trade, while GIFT Nifty indicated a positive start. The strength of any opening move will therefore depend on whether domestic buying can absorb continued foreign selling and whether oil remains above the level that has raised concerns about India’s inflation and external balances.

Power Grid was identified among the major gainers in the previous session, with HDFC Life, Kotak Mahindra Bank and Hindalco also supporting the market. The reported explanation was selective buying in financials, metals and other domestic-facing shares, not a broad-based risk-on move.

Information technology stocks remained under pressure amid cautious global sentiment, while auto and pharmaceutical names also faced selling. Market reports linked the weakness to higher crude, rising global borrowing costs and uncertainty around overseas demand. The divergence explains why the benchmark was stable even as sector performance remained uneven.

Banking sentiment also carries a policy overlay. Reports said the RBI’s proposed changes to loan-pricing rules could reduce lenders’ flexibility in setting rates, raising concerns about margin compression and near-term earnings visibility. That interpretation is a market concern, not an announced change to banks’ earnings.

The RBI has proposed harmonising and standardising the framework for interest rates on advances across regulated entities. Separate draft proposals would make external benchmark-linked loans optional for non-bank finance companies while seeking fairer and more transparent interest-rate practices.

The proposals matter for lenders because any change in the way loans are priced could affect the speed at which lending rates adjust and, in turn, the visibility of net interest margins. The RBI also imposed a Rs 59.20 lakh penalty on IndusInd Bank for non-compliance with directions on interest rates on deposits and securitisation of standard assets.

SEBI has proposed a colour-coded Credit Risk-o-Meter for debt securities and launched the SEBI Incident Reporting and Cyber Suraksha portals. Its chairman has also indicated that the regulator may clarify related-party transaction and disclosure requirements. The Ministry of Finance reduced the windfall gains tax on exports of petrol, diesel and aviation turbine fuel, although the size of the reduction was not available in the material.

US equities recovered on Friday but still posted a weekly decline, while Asian shares were broadly flat to lower on Monday. Investors are watching threatened US sanctions on Iran and the implications for oil supply and shipping through the Strait of Hormuz. Brent eased in early trade, but it remained elevated after a strong rise in the previous week.

US Treasury yields remained high, with the 10-year yield near 4.74% at the end of the previous session. The combination of higher oil and elevated yields is a difficult backdrop for Indian equities because it can increase inflation concerns, pressure corporate margins and reduce the relative appeal of emerging-market assets. The dollar index remained near 98.8, while the rupee ended the previous session at Rs 95.71 a dollar after support from a weaker dollar was partly offset by geopolitical concerns.

Foreign portfolio investors sold Rs 543 crore of Indian equities on August 21, their second consecutive session of net selling. Domestic institutional investors bought Rs 2,124 crore, extending their buying streak to nine sessions. The flow pattern provided a cushion to the market, but the contrast also explains why index declines remained contained without signalling a broad improvement in foreign risk appetite.

The latest macro information in the material was mixed. The index of core industries grew 5.4% year-on-year in July, slowing from 6.0% in June. No new CPI, IIP, GST, trade or India PMI release was identified for the morning report.

The core-sector moderation is relevant because it provides a partial read on industrial momentum at a time when higher energy costs are adding to the inflation risk. The market impact is likely to remain secondary to oil and global rates until a broader set of macro data becomes available.

Companies with fresh developments include Welspun Corp, which secured its largest-ever single pipe order worth Rs 17,200 crore from its US manufacturing facility. RailTel received a Rs 164 crore order from Western Coalfields, while Power Grid secured a confirmed work order valued at Rs 822.91 crore per annum through tariff-based competitive bidding.

NTPC Green Energy’s arm won 500 MW in an SECI assured peak-power tender at a discovered tariff of Rs 6 per kWh. Indian Oil signed a five-year agreement to supply Mauritius’ entire import requirement of petrol, diesel and aviation turbine fuel. HDFC Bank raised $1.75 billion through overseas bonds, and ICICI Bank doubled its overseas borrowing limit to $5 billion.

On the regulatory and operating front, Zydus Lifesciences received final USFDA approval for a generic ascorbic acid injection, while Jubilant Pharmova said the USFDA approved the first commercial product manufactured at its US arm. Aurobindo Pharma reported one observation related to facility and equipment maintenance at AuroPeptides, with no data-integrity or good manufacturing practice concerns cited. No company-specific earnings release or guidance update due on August 24 was available in the material.

The primary market is active, with the Symbiotec Pharmalab and Skyways Air Services issues opening on August 24 and the Horizon Industrial Parks and Lalithaa Jewellery offerings scheduled for listing. The Amagi Media Labs and Shanthi Gears transactions also keep institutional ownership changes in focus.

For the broader market, the key question is whether primary-market activity can coexist with continued foreign selling and higher funding costs. That will depend on subscription quality, listing performance and whether global oil and bond-market pressures persist.