INDIA STOCKS-Indian shares decline ahead of Trump's looming Iran deadline

By Bharath Rajeswaran

April 7 (Reuters) - Indian shares fell on Tuesday, weighed down by fears of escalation in the Middle East war and a looming deadline set by U.S. President Donald Trump for a deal.

The Nifty 50 .NSEI lost 0.65% at 22,818.80 and the Sensex .BSESN shed 0.64% to 73,639.40 as of 9:50 a.m. IST.

Fourteen of the 16 major sectors declined. The broader small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 lost 0.5% and 1%, respectively.

The U.S. president reiterated threats to strike Iran's power plants and civilian infrastructure unless Tehran reaches a deal by 8 p.m. EDT Tuesday, or 5:30 a.m. IST on Wednesday, to reopen the Strait of Hormuz. Iran said it wanted a permanent end to the conflict and not a temporary ceasefire.

Brent crude LCOc1 hovered around $112 per barrel. Elevated crude prices strain India's import bill and weigh on economic growth and corporate margins. O/R

The Nifty and the Sensex have each dropped 9.5% since the Iran war began on February 28.

"Sentiment remains highly volatile with the developments in the Iran war, which has already pressurised foreign outflows from India and the rupee," said Sonal Badhan, economist at Bank of Baroda.

Since the Iran war began on Feb 28, foreign institutional investors offloaded $15.8 billion worth of shares, including a record $12.7 billion in March.

"Given this backdrop, RBI will hold rates steady for the time being in its policy decision on Wednesday, remaining vigilant and announce growth forecasts keeping in view the impact of Iran war," Badhan said.

Rate sensitives such as financials .NIFTYFIN, banks .NSEBANK, auto .NIFTYAUTO, consumer .NIFTYFMCG lost 0.7%-1.5%.

Among stocks, Jubilant Foodworks JUBI.NS shed 8% after business update spurred worries of subdued March quarter earnings.

Bucking the broader trend, metal index .NIFTYMET rose 0.4%.

Hindalco HALC.NS rose 2.8% and Vedanta VDAN.NS gained 2.2% after J.P. Morgan upgraded the aluminium makers to "overweight" from "neutral" on higher-for-longer aluminium prices.