Financials, IT firms drag Indian shares lower ahead of budget
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Indian shares fell Tuesday, as financial stocks continued their slide since a short-sellers attack on the Adani Group and IT stocks dropped ahead of the Federal Reserve's policy decision, with investors also cautious ahead of the Union budget.
After a volatile opening, the Nifty 50 index was down 0.41% at 17,579.60 as of 11:12 a.m. IST, while the S&P BSE Sensex fell 0.42% to 59,246.83.
The heavyweight financials index fell 0.3%, continuing its drop in the wake of U.S-based Hindenburg Research's report on the Adani Group.
The group's seven listed companies have lost $65 billion in market value since the report on Wednesday, while financials have fallen 4.23% on concerns about their exposure to the group.
"Financials have seen some pressure in the wake of the Hindenburg report but the fundamentals continue to remain strong," said Astha Jain, senior research analyst at Hem Securities.
She expects the Nifty to find support at the 17,400 level, but said volatility would surge over the next few sessions as key events play out, starting with the Union budget on Wednesday.
Besides the government's fiscal consolidation path and borrowing calendar for fiscal 2024, traders will also watch for any incentives to entice foreign investors.
FIIs have piled out of the market recently, having offloaded 151.65 billion rupees ($1.86 billion) worth of shares since the Hindenburg report.
India is expected to peg GDP growth at 6-6.8% for 2023-24, the slowest in three years, at its pre-budget economic survey later in the day.
While most of the Adani Group stocks resumed their slide, the flagship Adani Enterprises rose 4.15% on the last day of its crucial $2.5 billion follow-on share offering.
IT stocks slid 1.5%, the most among the 13 major sectors, with all the constituents logging losses.
The U.S. Federal Reserve's decision, due on Feb. 1, is key for IT firms, which have major exposure to the United States.
The Fed is expected to raise rates by 25 basis points, but Fed Chair Jerome Powell's speech will be scrutinized for any signs of further increases. ($1 = 81.5930 Indian rupees)
