Aug 25 (Reuters) - Indian shares edged lower on Tuesday as higher oil prices due to Middle East tensions weighed, while investors awaited the monthly expiry of Nifty 50 derivatives contracts.
The Nifty fell 0.32% to 24,142.25 and the BSE Sensex shed 0.24% to 77,184.66 as of 9:58 a.m. IST.
Fourteen of the 16 major sectors logged losses. The broader small-caps and mid-caps were muted.
In the latest escalation of geopolitical tensions, Iran promised to retaliate against expanded U.S. economic sanctions that Washington said would cut off Tehran's economic lifeline.
Brent crude futures hovered around $92.5 per barrel.
"While the domestic earnings backdrop has improved meaningfully, external factors such as Mideast tensions have raised the risk of elevated crude and renewed supply-chain disruptions, both of which are important macro variables for India," said Bhautik Ambani, CEO of AlphaGrep Mutual Funds.
Investors will also focus on the Nifty 50's first monthly derivatives expiry under the new closing auction session for stocks with futures and options contracts tied to them, which has led to volatility in benchmark indexes during weekly derivatives expiry sessions.
"When too little volume sits in the auction book, the equilibrium price can drift away from where continuous trading left off, and that is exactly what unsettled traders in the initial weeks," said Rishabh Nahar, partner and fund manager at Qode Advisors.
The effectiveness of CAS will be tested not only during the Nifty 50 monthly expiry later today but also on the day the latest MSCI index rejig takes effect after market close on August 31, two traders said.
Among stocks, Great Eastern Shipping gained 2% after the company's board said it will consider a share buyback proposal.
Hindustan Copper fell 6.5% after the government offered to divest up to a 6% stake in the company at a 10.5% discount to its last close.
Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sherry Jacob-Phillips and Nivedita Bhattacharjee
Source: Reuters