Indian stocks retreat as oil and monsoon worries outweigh RBI steps

what happened

Indian equities moved lower on Monday, October 12, 2026, as investors considered the Reserve Bank of India’s latest actions to shore up the rupee. Concern about expensive oil and a poor monsoon kept risk appetite weak, Reuters reported. The Nifty 50 declined 0.7% to 22,363.35, while the BSE Sensex slipped 0.76% to 71,924.68. Both benchmarks ended their longest weekly losing runs in 25 years on Friday after recovering from multi-year lows, but the early advance on Monday did not last.

The next focus is domestic inflation data, which may provide further guidance on policy after the RBI increased rates last week. Anita Gandhi, head of institutional business at Arihant Capital Markets, said oil prices and the monsoon were still dictating market sentiment. In her view, they may add to price pressures, reduce near-term consumption and weigh on corporate earnings. Gandhi also cited continued foreign selling and a crowded primary market, which has drawn liquidity away from secondary shares, as factors that outweighed central-bank support and generally resilient quarterly updates.

Over the weekend, the RBI changed the way oil companies obtain dollars and imposed stricter hedging requirements. The rupee subsequently recovered 1% from levels close to record lows, marking its strongest advance in six months. Brent reached $106 even after US President Donald Trump said Russia and Ukraine would stop attacks on energy facilities. Ongoing tensions in the Middle East kept prices elevated, affecting India, the world’s third-largest oil importer.

Twelve of 16 main sector gauges gained. Small-cap and mid-cap shares rose 1.4% and 0.1%, respectively, helped by robust inflows into domestic funds. Banking and IT measures fell 0.6% and 0.8% after rising 1.4% and 3% on Friday. Apollo Hospitals lost 3.2%, Max Healthcare fell 2% and Medanta (MEDN.NS) eased 0.3% after the Supreme Court asked the government why it had failed to rein in the drug market amid concerns about large mark-ups. D-Mart owner Avenue Supermarts dropped 4.3% after brokerages pointed to margin risks in its September-quarter results. Tech Mahindra declined 2.9% as investors worried that stronger competition from satellite-enabled mobile services could restrain telecom spending.

why it matters

The session showed that oil costs, weather concerns and foreign selling were stronger market pressures than the RBI’s rupee-support measures, while domestic funds aided smaller stocks.

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