Bengaluru (Reuters) – Indian benchmark indexes inched lower on Thursday, weighed by worries that U.S. interest rates will remain higher for longer, while domestic focussed small and mid-cap indexes continued their record run.
The Nifty 50 (.NSEI) index and S&P BSE Sensex (.BSESN) were down 0.1%, each at 19,591 and 65,807 at 10:32 a.m. IST.
The small-caps (.NIFSMCP100) and mid-caps (.NIFMDCP100) were up 0.4% and 0.4%, respectively, continuing to outperform the blue-chip benchmarks and hitting fresh record highs.
“There is froth in the small-cap segment, which is driven by momentum,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Small and mid-cap stocks have risen about 31% and 28%, respectively so far this year compared with 8% gains in benchmark indexes.
The U.S. dollar surged to a six-month high and Treasury yields rose on expectations that U.S. interest rates will remain higher for longer, while Brent crude price has surged 5% in the past two weeks.
A major concern in the market is the Brent crude rising above $90 with negative implications for India’s macros and inflation, Vijayakumar said, adding that foreign investr selling has been triggered by the rising bond yields and stronger dollar.
Foreign portfolio investor (FPI) inflows in Indian equities were at a four-month low of 122.62 billion rupees ($1.48 billion) in August.
Among indexes, the public sector bank index (.NIFTYPSU) was up 0.6%, while consumer index dropped 0.2%, driven by 2.4% fall in Tata Consumer (TACN.NS).
Tata Consumer had risen on over 4% on Wednesday after Reuters reported that the company was in talks to buy at least 51% of popular Indian snack food maker Haldiram’s.
Coal and power stocks were also gainers in early trade with Coal India (COAL.NS), Power Finance Corp (PWFC.NS), REC (RECM.NS) rising over 1%. Coal India has surged 12% in the past week on higher demand for the commodity.
