Indian Shares Slip as Oil Prices, Fed Rate Worries Weigh

Indian equity markets opened lower on Monday, dragged by rising crude oil prices and renewed concerns over a potential US interest rate hike. The Nifty 50 index declined 0.68% to 24,011.48, while the BSE Sensex fell 0.58% to 76,824.45 in early trading.

HDFC Bank, the heaviest weighted stock on both indices, rose 1.5% after its CEO, Sashidhar Jagdishan, announced he would not seek reappointment when his term ends in late October. Analysts at Nuvama Institutional Equities viewed the development positively, noting that a term extension from the Reserve Bank of India would have been difficult given recent operational and governance lapses. The board now has more time to find a successor.

Reliance Industries, a conglomerate with interests in oil and telecom, slipped 1% ahead of the MSCI index rejig scheduled for the close of this session. The company's weight in the MSCI Global Standard index is set to be reduced, which could trigger outflows from foreign investors.

Traders are bracing for volatility as the index change coincides with the recent introduction of a new stock closing system. "This session will absolutely be a litmus test for the new closing auction session," said Ponmudi R, CEO of wealth management platform Enrich Money, highlighting the challenge of handling a known and concentrated institutional flow event.

Global sentiment was further dampened after US forces struck two Iranian launchers, the first known American strikes on Iran since late July. This pushed Brent crude prices up 2.5% to $90 per barrel. Additionally, comments from US Federal Reserve Chair Kevin Warsh raised the odds of a near-term rate hike in the world's largest economy.

In India, all 16 major sectoral indices traded lower. The IT index fell 2%, giving back some of the previous session's 3.5% gain. Small-cap and mid-cap stocks each declined by 1%.