Fears of a Fed rate hike cause stock indices to close flat
Metals fell 1.58%, accounting for eight of the 13 major sectoral indices. Adani Enterprises led the decrease, with roughly 20% of the metal index weightage
The Indian stock market fought for direction before finishing moderately higher on Thursday, with gains in high-weightage financials and IT sectors offsetting concerns over the Federal Reserve’s rate-hike trajectory and a drop in Adani Group holdings.
The Nifty 50 ended 0.12% higher at 17,893.45, while the S&P BSE Sensex finished 0.23% higher at 60,806.22. Both indexes moved in a narrow range of 0.35% gains to 0.6% losses.
Metals fell 1.58%, accounting for eight of the 13 major sectoral indexes. Adani Enterprises led the decrease, with roughly 20% of the metal index weightage.
Stocks in the financial sector and information technology gained 0.14% and 0.7%, respectively.
Twenty-five Nifty 50 members fell, led by Adani Enterprises and Adani Ports, which fell 11% and 2.83%, respectively.
Adani Group shares had recovered losses for two consecutive sessions following a severe selloff following a Jan. 24 report by US short-seller Hindenburg Research, which raised concerns about the conglomerate’s financials.
However, index producer MSCI announced on Thursday that some Adani securities should no longer be classified as free float.
Several institutional investors and funds are allocated according to the MSCI index weighting, which they regard as a benchmark. If the weightage of Adani stocks falls as a result of the assessment, it might lead to withdrawals and a further decline in value, according to two experts.
Wall Street equities slumped overnight as key Fed officials expressed differing views on rate rises.
Governor Christopher Waller predicted a “long fight” to meet the Fed’s 2% inflation objective, while Governor Lisa Cook predicted a “soft landing.” Fed Chair Jerome Powell highlighted “disinflation” in a speech on Tuesday.
“Despite the Federal Reserve’s actions, inflation is unlikely to slide off the cliff in a hurry,” Astha Jain of Hem Securities said, adding that domestic market instability is expected to persist in the first half of this year.
The drop in the dollar index may boost emerging countries such as India, but economists are concerned about high valuations and persistent foreign selling.
