A bird flies past a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, February 1, 2023. REUTERS/Niharika Kulkarni/File Photo Acquire Licensing Rights
BENGALURU, Oct 31 (Reuters) – Indian blue-chips fell on Tuesday to log their worst month in 2023 as elevated U.S. interest rates triggered persistent sales by foreign investors, while a rise in oil prices due to the Middle East conflict also added to the selling pressure.
The benchmark NSE Nifty 50 (.NSEI) fell 0.32% to 19,079.60, while the S&P BSE Sensex (.BSESN) settled 0.37% lower at 63,874.93. They have lost nearly 3% each in October.
The concerns around the Middle East conflict have led to a spike in oil prices, a negative for net importers like India.
More tellingly, the U.S. Federal Reserve's rhetoric of higher-for-longer rates has helped send U.S. Treasury yields to multi-year highs, making them more attractive for investors.
As a result, foreign investors have offloaded 228.50 billion rupees ($2.74 billion) worth of Indian shares so far in October, the most for any month since January.
The Fed is widely expected to hold rates at its policy decision after the bell on Wednesday, but Chair Jerome Powell's commentary will be key.
Any indication of rates remaining high for a prolonged period will weigh on IT stocks, which have already warned of weak spending by their U.S. and European clients. The IT index (.NIFTYIT) lost 0.19% on the day and 3.78% for the month – its worst in 2023.
"The domestic market is factoring prolonged high interest rates in the U.S. The persistent foreign selling in Indian shares due to higher U.S. yields will also trigger consolidation," said Pramod Gubbi, founder of Marcellus Investment Managers.
Also weighing on sentiment was a drop in Asian markets after the Bank of Japan tweaked its bond yield control policy.
Auto stocks (.NIFTYAUTO) lost 0.67% ahead of monthly sales data. Mahindra and Mahindra (MAHM.NS), Eicher Motors (EICH.NS) fell 2.62% and 1.85% respectively, and were among the top losers on the Nifty.
Sun Pharma (SUN.NS) lost 2.39% on multiple block deals.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Savio D'Souza
Our Standards: The Thomson Reuters Trust Principles.
Saudi Arabia said on Tuesday it will offer tax incentives for foreign companies that locate their regional headquarters in the kingdom, including a 30-year exemption for corporate income tax.
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India's Nifty 50, Sensex log worst month in 2023 – Reuters India
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