India Stocks: Indian shares trim losses on foreign inflow hopes; IT sinks, oil surges

Infosys

03/06/2026 11:10

Updates for markets close
By Vivek Kumar M and Bharath Rajeswaran

    June 3 (Reuters) - 
    Indian shares pared some of their intraday losses on Wednesday on 
    reports
     of likely government measures to stem the rupee's slide, attract foreign bond investors, and review the long-term capital gains tax.   
  

    However, a pullback in IT stocks after a recent rally and rising oil prices kept markets in the negative territory.
  

    The Nifty 50 .NSEI closed 0.33% lower at 23,405.6, while the BSE Sensex .BSESN lost 0.41% to 74,346.17. The benchmarks had dropped about 1.5% intraday.
  

    "The late recovery was driven by short covering after reports about tax cuts for foreign bond investors. This led to anticipation about similar steps for equity markets," said Kranthi Bathini, director of equity strategy at Wealthmills Securities.
  

    India's limited exposure to direct AI beneficiaries and elevated oil prices have propelled foreign outflows worth record $26.8 billion from the country's stocks this year.
  

    The benchmarks have dropped in five of the last six trading sessions, with Tuesday's session being the only break.    
  

    Brent crude rose about 3% to $99 a barrel on Wednesday as Gulf hostilities flared and diplomacy between Washington and Tehran showed little progress.

    Higher oil prices weigh on current account, economic growth and trigger inflationary pressures on India, the world's third-largest crude importer. 
  
Seven of the 16 major sectors declined. 
The broader small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 fell 0.1% and 0.4%, respectively.

        The IT index .NIFTYIT lost 5.6% in its worst session in four months, unwinding part of a 7.6% three-day rally as investors weighed AI-led disruption and a muted earnings outlook against cheaper valuations. The sub-index has dropped 22.4% so far in 2026.
TCS TCS.NS fell 8.4%, while Infosys INFY.NS and HCLTech HCLT.NS slid 3.8% and 5.3%, respectively.

    Investors now await the Reserve Bank of India's policy decision on Friday. 
  

    The central bank is 
    expected
     to keep its key rate steady at 5.25%, while signalling a possible hawkish shift due to inflation pressures and weakness in rupee.
  


 (Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sherry Jacob-Phillips and Nivedita Bhattacharjee)
 ((VivekKumar.M@thomsonreuters.com;))