Nifty slips below 24,000 as oil, West Asia tensions weigh on Indian equities

Indian equities extended their decline into a third session as renewed US-Iran tensions raised concern about disruption to crude supplies through the Strait of Hormuz. Brent crude traded near multi-month highs, while global bond yields also rose during the session. Traders attributed the risk-off tone to the combination of higher energy costs, imported-inflation concerns and tighter financial conditions.

Auto stocks were the clearest drag. Eicher Motors, Bajaj Auto and Mahindra & Mahindra were among the reported laggards after a mixed August sales update, while Hero MotoCorp fell sharply intraday after reporting mixed monthly sales data and weaker exports. Higher crude also weighed on airlines, tyre makers, paint companies and oil marketing companies because of its potential impact on fuel and input costs.

Information technology stocks also weakened. Infosys, Wipro and HCL Technologies were among the reported drags as global technology shares came under pressure from higher US Treasury yields and softer US macroeconomic signals. The market response was therefore concentrated in rate-sensitive and globally exposed sectors rather than being driven by a single domestic earnings event.

Coal India provided a counterweight after its August operating update. August production declined 5.7% year-on-year to 47.5 million tonnes, but offtake rose 5.5% year-on-year to 60.6 million tonnes. For April to August, dispatches increased 6.7% year-on-year to 322.9 million tonnes, while the reported e-auction premium rose 59% year-on-year for the comparable period.

The market response indicated that demand and pricing signals were being valued more heavily than the monthly production shortfall. Coal India, along with Adani Ports, Power Grid, NTPC and other energy-linked names, was reported among the gainers. This helped explain why power, oil and energy and infrastructure-linked shares held up better even as the broader market weakened.

The Reserve Bank of India said provisional foreign-exchange inflows under its special USD-INR swap facility reached $136.38 billion as of August 31. FCNR(B) deposits accounted for $127.23 billion, overseas foreign-currency borrowings for $5.26 billion and external commercial borrowings for $3.89 billion. The FCNR(B) window closed on August 31, while the facility for external commercial borrowings and overseas foreign-currency borrowings remains open until December 31.

The immediate market implication is that the inflows provide support for the rupee and foreign-exchange liquidity at a time when crude is elevated. Traders attributed the rupee's resilience to central-bank dollar sales and the new inflows, although the data does not establish how long that support will offset the pressure from the oil bill.

SEBI's Closing Auction Session remained a market-structure focus. HDFC Securities chief executive Dhiraj Relli said the mechanism was intended to improve price discovery and curb end-of-day volume-weighted-average-price manipulation. Reports also pointed to concerns about lower participation and the upcoming NSE IPO, factors being monitored by market participants rather than confirmed as a direct cause of the broader fall.

The global backdrop improved for the September 3 session, but remained sensitive to rates and geopolitics. Wall Street rebounded after a three-session decline, while Asian shares advanced after US President Donald Trump played down the prospect of a prolonged conflict with Iran. Oil prices eased from their earlier advance and US Treasury yields moved lower from multi-year highs.

Reuters reported that the US 10-year Treasury yield fell to 4.784%. The move matters for Indian equities because a retreat in global yields can reduce some pressure on technology and other long-duration stocks, although higher crude remains a risk to India's inflation, current-account balance and corporate input costs.

Foreign institutional investors were net buyers of Rs 6,688.37 crore in Indian equities on September 2, according to provisional exchange data. Domestic institutional investors bought a net Rs 2,812.98 crore. The combined inflow did not prevent the decline, showing that institutional purchases were outweighed by sector-specific selling and the negative global risk backdrop during the session.

The corporate news flow was mixed. ICICI Bank completed the purchase of an additional 2% stake in ICICI Prudential Life Insurance for around Rs 1,470 crore, taking its holding in the subsidiary to approximately 52.8%. L&T Finance allotted non-convertible debentures worth Rs 500 crore, while CRISIL upgraded Sterlite Technologies' long-term credit ratings to AA/Stable from AA-/Stable.

Hexaware Technologies announced a leadership transition: Srikrishna Ramakarthikeyan will leave the CEO and whole-time director roles on October 28 and become a senior adviser, while Vivek Jetley will become CEO. Muthoot Finance shareholders approved Alexander George as managing director and George Alexander Muthoot as vice-chairman and whole-time director from October 1.

Technocraft Ventures reported first-quarter net profit of Rs 10.7 crore, up 15.1% year-on-year, on revenue of Rs 92.7 crore, up 2.2% year-on-year. EBITDA rose 15.1% year-on-year to Rs 18 crore and the margin was 19.4%, against 17.2% in the year-ago quarter. A consensus estimate was not available in the material, so the result cannot be classified as a beat or miss.

Primary-market activity remains active despite the weak secondary-market tone. Deepa Jewellers and Rays of Belief are scheduled to close their issues on September 3. The former had received bids equivalent to 1.52 times the shares on offer at 11:00 IST on September 2, while the latter had received bids for 1.93 times the offer at 11:03 IST on the same day.

Purple Style Labs closed its IPO on September 2 after receiving bids equivalent to 0.28 times the shares on offer at 11:00 IST. In the listed market, Sumax Engineering's SME debut at a premium contrasted with Annu Projects' discounted opening, underscoring the uneven reception for new issues.