Indian shares muted on Fed rate-hike fears; Adani stocks resume fall
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Indian shares struggled for direction before closing marginally higher on Thursday as gains in high-weightage financials and tech stocks offset concerns over the U.S. Federal Reserve's rate-hike trajectory and a slide in Adani Group stocks.
The Nifty 50 index closed 0.12% higher at 17,893.45, while the S&P BSE Sensex ended 0.23% up at 60,806.22.
Both the indexes traded in a tight range between 0.35% gains and 0.6% losses.
Eight of the 13 major sectoral indexes logged losses, with metals falling 1.58%. Adani Enterprises, with nearly 20% weightage on the metal index, led the decline.
Financials and information technology stocks added 0.14% and 0.7%, respectively.
Twenty-five of the Nifty 50 constituents declined, with Adani Enterprises and Adani Ports falling 11% and 2.83%, respectively.
Adani Group shares had recouped losses for two consecutive sessions after a sharp selloff following U.S. short-seller Hindenburg Research's Jan. 24 report, which flagged concerns regarding the conglomerate's financials.
However, index provider MSCI on Thursday said it had determined that some Adani securities should no longer be designated free float.
Several institutional investors and funds allocate per the MSCI index weighting and consider it a benchmark. If the weightage of Adani stocks slips following a review, it could lead to outflows and a further slide in value, two analysts said.
Wall Street equities fell overnight following divergent views on rate hikes from key Fed officials.
Governor Christopher Waller said that the battle to reach Fed's 2% inflation target "might be a long fight," while Governor Lisa Cook was optimistic of a "soft landing." In a speech on Tuesday, Fed Chair Jerome Powell underlined that "disinflation" was underway.
"Inflation is unlikely to fall off the cliff in a hurry despite the Federal Reserve's measures," Astha Jain of Hem Securities said, adding that the uncertainty in domestic markets is likely to continue in the first half of this year.
The fall in the dollar index could benefit emerging markets like India, but high valuations and persistent foreign selling remain a worry, analysts said.
($1 = 82.6370 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil and Nivedita Bhattacharjee)
