BENGALURU (Reuters) -Indian shares struggled for direction on Thursday, on concerns over the U.S. Federal Reserve’s rate-hike trajectory, while a drop in Adani Group company stocks also dampened sentiment.
The Nifty 50 index was down 0.07% at 17,860.60, as of 11:02 a.m. IST, while the S&P BSE Sensex rose 0.02% to 60,777.41.
Twenty-six of the Nifty 50 constituents declined, with Adani Enterprises and Adani Ports falling 7.9% and 3.5%, respectively.
Adani Group shares had recouped losses for two consecutive sessions after witnessing a sharp selloff following the U.S. short-seller Hindenburg Research’s report, which flagged concerns regarding the conglomerate’s financials on Jan. 24.
Index provider MSCI said on Thursday it had determined that some Adani securities should no longer be designated as free float.
Several institutional investors and funds allocate as per the MSCI index and consider it a benchmark. If the weightage of Adani stocks gets reduced in the index following a review, it would lead to outflows and likely result in a slide in the group’s stock, two analysts said.
Nine of the 13 sectoral indexes logged losses, with metal falling 1%. Adani Enterprises, with nearly 20% weightage on the metal index, led the decline.
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,” said Astha Jain of Hem Securities, adding, uncertainty in domestic markets is likely to continue in the first half of the calendar year 2023.
The fall in the dollar index could benefit emerging markets like India, but high valuations and persistent foreign selling continue to be worrisome, analysts said.
($1 = 82.6370 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil and Nivedita Bhattacharjee)
