Sensex, Nifty End Marginally Lower As Crude Surge, Bank Selling Weigh On Markets

Indian equity benchmarks Sensex and Nifty gave up their gains from the day's highs to end marginally lower on Tuesday, as elevated crude oil prices, selling in banking stocks and weakness in autos weighed on investor sentiment.

The Sensex closed 12.99 points, or 0.02 percent, lower at 76,944.28, while the Nifty ended 24.60 points, or 0.1 percent, down at 24,055.80. Market breadth remained weak, with 1,655 shares advancing, 2,476 declining and 185 unchanged.

The Sensex had fallen around 300 points from the day's high, while the Nifty ended near the psychologically important 24,050 level.

Banks Drag Benchmarks

Financial stocks remained under pressure, with the Bank Nifty down nearly 1.5 percent, or around 800 points. Shriram Finance was the worst-hit Nifty 50 stock, falling more than 5 percent.

Axis Bank, ICICI Bank and State Bank of India declined 2-3 percent, weighing on the benchmark indices.

The selling came as investors remained cautious amid renewed geopolitical tensions and concerns over the impact of elevated oil prices on inflation and interest rates.

Crude Prices Rise Amid US-Iran Tensions

Oil prices rose for a second consecutive session as renewed hostilities between the US and Iran heightened concerns over prolonged disruptions to energy flows through the Strait of Hormuz.

Brent crude climbed towards $92 a barrel after US forces hit an island in the Strait of Hormuz, while Iran retaliated with attacks on the UAE and Jordan. West Texas Intermediate traded near $87 after rising 2.8 percent on Monday.

The sharp rise in crude prices prompted profit booking at higher levels, particularly as investors assessed the potential impact on India's inflation, currency and corporate earnings.

ITC leads Nifty gainers

ITC emerged as the top Nifty 50 gainer, rising 4.6 percent and replacing HCL Technologies at the top of the index.

HCL Technologies, Adani Ports and Special Economic Zone and Bharti Airtel gained 3-4 percent.

The broader market, however, remained under pressure. Midcap indices declined 1.5-1.7 percent, while most broader market indices ended in the red.

The Nifty Oil & Gas index recovered from its lows and ended largely unchanged from Monday. Reliance Industries and Chennai Petroleum were among the top gainers in the sector, with both rising nearly 2 percent.

Shares of Happiest Minds Technologies remained under pressure, falling more than 11 percent. The stock has faced concerns from some analysts over the valuation assigned to the company under its proposed merger with ITC Infotech.

Sugar Stocks Slide After Tighter Stock Limits

Sugar stocks also witnessed sharp selling after the government further tightened stockholding limits for dealers.

The Ministry of Consumer Affairs, Food and Public Distribution said the maximum quantity of sugar dealers can hold will be reduced to 2,000 quintals from the existing 4,000 quintals.

The revised limit will take effect from September 15 and remain in force until November 30, 2026. The move is aimed at curbing hoarding and speculative trading while improving sugar availability in the domestic market.

Growth Resilience Vs Global Risks

Vinod Nair, Head of Research, Geojit Investments, said markets are increasingly balancing India's strong growth momentum against mounting global uncertainties.

He noted that better-than-expected GDP growth has underscored the resilience of domestic demand and the broader economy, but escalating geopolitical tensions in the Middle East and a more hawkish Federal Reserve have renewed concerns over inflation and the possibility of higher interest rates for longer.

According to Nair, persistent cost pressures could weigh on corporate earnings and the pace of demand recovery. Higher US bond yields and renewed foreign capital outflows have also kept sentiment cautious, with financial stocks facing the most pressure while FMCG and IT sectors continue to attract defensive buying.

In the near term, he said market direction is likely to depend on developments in energy markets, global monetary policy expectations and capital flows into emerging economies.