By Bharath Rajeswaran
BENGALURU (Reuters) -Indian shares recovered from a muted start on Thursday, helped by Reliance Industries, while the broader, more domestically-focussed small- and mid-caps extended their decline on concerns over fund flows into the segments.
The blue-chip index NSE Nifty 50 was up 0.19% at 21,991.05, while the BSE Sensex rose 0.31% to 72,527.39, as of 10:06 a.m.
IST.
“This consolidation is likely to continue for some more time,” said Neeraj Dewan, director at Quantum Securities.
“Barring a few sessions of profit booking, like Wednesday, there may not be a major correction because there is still liquidity waiting to be deployed,” Dewan added.
The benchmarks, which lost about 1% each in the previous session, struggled for direction, swinging between 0.2% gains and 0.2% losses in early trade, before turning positive.
Oil-to-telecom conglomerate Reliance Industries gained about 1.5% after the company and Walt Disney announced the merger of their Indian television and streaming media assets, creating a $8.5 billion entertainment juggernaut.
The small- and mid-caps dropped about 0.4% each, underperforming the benchmarks. They lost about 2% each on Wednesday as well.
The drop comes after the country’s mutual fund industry body asked members to moderate flows into small- and mid-cap funds and protect investors from large outflows.
The Association of Mutual Funds in India’s (AMFI) request followed communication from the country’s market regulator asking fund houses to provide more information about risks associated with such funds.
“The AMFI circular has led to some panic, certainly adding to the selling pressure in small- and mid-caps,” Dewan said.
Small- and mid-caps gained about 74% and 61% in 2023, outperforming a 26.2% rise in the Nifty 50.
Asian markets were muted ahead of U.S.
inflation data, due after the closing bell, which comes amid a sharp pullback in expectations of early U.S. interest rate cuts. [MKTS/GLOB]
India’s economic growth data is also due after market hours and is expected to show that growth likely moderated to 6.6% in the October-December quarter.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Varun H K and Sonia Cheema)
