Domestic markets declined Thursday, with the Nifty falling 1.6% and Sensex 1.7%, as rising oil prices and high US Treasury yields pressured equities.
Financial services, which hold a large weighting in the Nifty, dropped following Irdai's proposal to cap distributor commissions and lower acquisition costs.
Analysts suggest concerns over inflation and US interest rates will likely keep foreign investor sentiment cautious, potentially delaying large inflows until January.