Indian blue-chips fell on Tuesday to log their worst month in 2023 as elevated US interest rates triggered persistent sales by foreign investors, while a rise in oil prices due to the West Asia conflict also added to the selling pressure.

The benchmark NSE Nifty 50 fell 0.32 per cent to 19,079.60, while the S&P BSE Sensex settled 0.37 per cent lower at 63,874.93. They have lost nearly 3 per cent each in October.

West Asia issue

The concerns around the West Asia conflict have led to a spike in oil prices, a negative for net importers like India.

More tellingly, the US Federal Reserve's rhetoric of higher-for-longer rates has helped send US Treasury yields to multi-year highs, making them more attractive for investors.

As a result, foreign investors have offloaded ₹22,850 crore worth of Indian shares so far in October, the most for any month since January.

US Fed meeting

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 US and European clients. The IT index lost 0.19 per cent on the day and 3.78 per cent for the month - its worst in 2023.

"The domestic market is factoring prolonged high interest rates in the US. The persistent foreign selling in Indian shares due to higher US 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 lost 0.67 per cent ahead of monthly sales data. Mahindra and Mahindra, Eicher Motors fell 2.62 per cent and 1.85 per cent respectively, and were among the top losers on the Nifty.

Sun Pharma lost 2.39 per cent on multiple block deals.

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