Escalating tensions between the US and Iran kept investors cautious, while Brent crude jumped 3.63 per cent to $91.30 per barrel. Investor sentiment was also affected after Federal Reserve Chair Kevin Warsh’s hawkish comments increased expectations of a potential September rate hike.
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Equity benchmarks ended lower on Monday as rising crude oil prices, elevated global bond yields and fears of a potential US interest-rate hike weighed on sentiment. Select stocks also saw sharp swings in the final minutes as MSCI-index linked investors adjusted portfolios ahead of the rebalancing, amid the new closing auction system (CAS).
BSE Sensex closed 307.24 points, or 0.40 per cent, lower at 76,957.27, while the Nifty 50 fell 95.25 points, or 0.39 per cent, to 24,080.40.
About 90 per cent of the MSCI rejig volumes were executed in CAS today. The session witnessed frenetic price action, with $4.16 billion in NSE cash-market volumes, accounting for 21 per cent of the day’s total cash-market volume.
Escalating tensions between the US and Iran kept investors cautious, while Brent crude jumped 3.63 per cent to $91.30 per barrel. Investor sentiment was also affected after Federal Reserve Chair Kevin Warsh’s hawkish comments increased expectations of a potential September rate hike.
Vinod Nair, Head of Research at Geojit Investments Limited, said higher crude prices and global bond yields had renewed concerns about energy-led inflation and a higher interest-rate environment. However, stock-specific buying in the broader market helped the indices recover from intraday lows, supported by expectations of healthy Q1FY27 GDP growth, festive-led demand and better GST collections, he said.
Ponmudi R, CEO of Enrich Money, said broad-based selling in early trade was triggered by renewed geopolitical tensions, a weaker global backdrop and rising rate-hike expectations. He said strength in private banking and auto stocks helped cushion losses through the session.
Investors also remained cautious ahead of the quarterly MSCI index reshuffle implemented at the close, which was expected to result in large passive-fund flows through the CAS session.
Shares of Laurus Labs, Lenskart, Adani Energy Solutions and Groww were added to the MSCI index, while Balkrishna Industries, SBI Cards and Astral were removed. Reliance Industries would see a lower weight, while Adani Enterprises would gain weight.
In the CAS session, 31 stocks hit the upper 3 per cent band, while 10 hit the lower 3 per cent band. Adani stocks saw the deepest discounts to their all-day VWAP despite being slated for inflows, with Adani Enterprises, Adani Energy Solutions and Adani Ports all ending at the lower 3 per cent band.
Among key MSCI names, Eternal, Astra Microwave, SBI Cards and Laurus Labs saw around 40 per cent of their full-day volumes traded during the CAS session in futures.
Index rebalancing days see heavy trading at the close, as index funds, exchange-traded funds and other passive investors realign their portfolios at the closing price.
Broader markets also came under pressure, with both midcap and smallcap indices declining over a per cent intraday before settling on a mixed note, reflecting a cautious undertone. Sectoral losses were led by media, metals and FMCG, while banks and pharma remained resilient.
Sun Pharma, Nestle India, Axis Bank and Max Health were among the top Nifty 50 gainers, while Adani Enterprises, Adani Ports, ITC, Bharti Airtel and TMPV led the losers.
HDFC Bank remained in focus after MD and CEO Sashidhar Jagdishan decided not to seek reappointment and will retire on October 26, 2026.
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