India stocks subdued as higher oil, bond yields counter growth optimism

Among individual stocks, Tribhovandas Bhimji Zaveri TBZL.NS surged 20% after Chennai-based GRT Jewellers agreed to buy a controlling stake in the jewellery retailer.

Happiest Minds HAPP.NS fell 4.7% after ITC ITC.NS said its IT unit would buy a 22.1% stake in the software services provider. ITC gained 3%.

Morgan Stanley said the deal would expand ITC Infotech's U.S. footprint and boost shareholder value.

Newly listed Milky Mist Dairy MILY.NS gained 7.3% after a quarterly profit rise.

Godrej Agrovet GODE.NS climbed 8.5% after Kotak reiterated "buy", citing strong growth prospects and attractive valuations.

Bharti Airtel BRTI.NS added 2.6% after HSBC retained "buy".

India's economy grew 7.8% year-on-year in the April-June quarter, surpassing forecasts as investment and manufacturing strengthened alongside resilient consumer demand.

However, renewed Middle East fighting lifted crude prices, raising worries about inflation and U.S. rate hikes, and pushed global bond yields higher. Oil prices rose about 1% to $91.30 a barrel, extending the previous session's 2.5% gain. O/R

"The way yields are rising everywhere tells you the market is now firmly pricing a U.S. rate hike this year with crude continuing to spiral higher," said Shrikant Chouhan, head of equity research at Kotak Securities.

U.S. 10-year yields hit 20-month highs after hawkish Federal Reserve commentary, while German and French yields reached 15-year peaks. India's benchmark 10-year yield also neared 7%, reflecting global rate pressures that could curb foreign inflows and raise borrowing costs.