India Stocks: Indian shares fall ahead of RBI decision; Nifty unwinds some of its closing-auction bounce

ICICI Bank

04/08/2026 11:20

Updates for markets close
By Bharath Rajeswaran
Aug 4 (Reuters) - Indian shares fell on Tuesday ahead of the central bank's Wedensday policy decision, with the blue-chip Nifty 50 partially reversing the previous session's sharp jump as investors adjusted to a new closing-auction mechanism for stocks with futures and options contracts.
The volatility index .NIFVIX rose to 12.1875, its highest level in a week as investors tweaked positions before the expiry of weekly Nifty derivatives contracts.
The Nifty .NSEI fell 0.64% to 24,614.90, while the BSE Sensex .BSESN declined 0.27% to 78,428.95. On Monday, the indexes had gained 1.6% and 0.7%, respectively, an unusual divergence following the launch of the new mechanism.
"The new closing-auction session for F&O stocks has triggered early adjustment-related volatility, with the impact more pronounced in the Nifty than the Sensex because of their differing exposure to the impacted stocks," said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
"While it added to caution on weekly expiry day, these are teething issues as investors adapt to a system designed to curb price distortions. The impact should ease over a few weeks' time," Dadheech added.
Brent crude rebounded 2.9% to $86.2 a barrel after sliding 7% in the previous session, on uncertainty over talks to end the U.S.-Iran war.
Higher oil prices are a concern for India, the world's third-largest crude importer, as they risk fanning inflation, slower growth and hitting company profits.
The Reserve Bank of India is widely expected to keep its policy rate unchanged at 5.25% on Wednesday as it assesses the inflationary effects of higher crude prices and a monsoon deficit alongside the impact of recent measures to support the rupee and attract foreign inflows.
Fifteen of the 16 major sectors declined. Financials .NIFTYFIN and IT .NIFTYIT fell 0.5% and 0.8%, respectively. Small-caps .NIFSMCP100 rose 0.2%, while mid-caps .NIFMDCP100 slipped 0.3%.
State-run insurer LIC LIFI.NS dropped 8.7% after the government launched a sale of an up to 6.5% stake at a 10.9% discount to Monday's close.
Reliance Industries RELI.NS and HDFC Bank HDBK.NS fell 2.1% and 1.5%, respectively.
Dabur DABU.NS fell 3.8% after India's food regulator barred it from selling products carrying unverified or misleading claims such as "100% natural," "100% pure" and "100% organic."

 (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Subhranshu Sahu, Mrigank Dhaniwala, Nivedita Bhattacharjee and Ronojoy Mazumdar)
 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))