Indian Shares Close Lower on Mixed Auto Sales Data and Interest Rate Concerns

Indian shares closed lower on Tuesday, driven by a decline in auto stocks due to mixed sales data in September. The NSE Nifty 50 index settled 0.56% down at 19,528.75, while the S&P BSE Sensex fell 0.48% to 65,512.10. Auto stocks, including Eicher Motors and Escorts Kubota, experienced losses of 2.68% and 1.73% respectively, following a decline in motorcycle and tractor sales.

State-run oil producer ONGC also contributed to the market decline, losing 3.78% and dragging the energy index 1.28% lower. Concerns over elevated interest rates further weighed on sentiment, as Asian equities reached their lowest point in 2023 after hawkish comments from U.S. Federal Reserve Chair Jerome Powell and Vice Chair for Supervision Michael Barr.

Aishvarya Dadheech, Chief Investment Officer at Fident Asset Management, noted that the risk-off sentiment in the markets was triggered by the slide in global equities on U.S. rate worries. However, Dadheech expected the benchmarks to remain resilient due to the rotation of funds from small- and mid-caps to large-caps.

While select pockets in domestic equities have become overheated, festive demand and September-quarter earnings are likely to support the markets and arrest the selling pressure, according to Saurabh Jain, Assistant Vice President of Research at SMC Global Securities.

In individual stock news, Vedanta gained 3.68% after announcing a split into six separate businesses. HeidelbergCement India also jumped 7.04% on reports of acquisition talks by JSW Cement.

Despite the market decline, small- and mid-cap stocks rose on Tuesday, indicating a potential correction in the small- and mid-cap space after recent gains. However, they have outperformed the Nifty 50 with gains of approximately 32% and 29% respectively in 2023 so far.

Overall, while concerns over interest rates and mixed sales data weighed on Indian shares, the market is expected to find support from festive demand and upcoming September-quarter earnings.