Try to pass repo.ui to reposetup hooks The ui object we received in this function may belong to another repo, which could be confusing from the hook point of view. Trying to use the ui object from the newly created repo should avoid this confusion.

#!/bin/sh

hg init

echo "Is there an error message when trying to diff non-existing files?"
hg diff not found

echo "Is there an error message when trying to add non-existing files?"
hg add not found