Indian shares end lower as U.S. inflation sparks foreign outflow fears
Indian shares ended sharply lower on Friday, dragged by worries of more foreign outflows after red-hot U.S. inflation data increased bets on aggressive interest rate hikes by the Federal Reserve.
The NSE Nifty 50 index (.NSEI) fell 1.3% to 17,374.75, while the S&P BSE Sensex (.BSESN) closed 1.3% lower at 58,152.92. For the week, both indexes fell nearly 1%.
The Reserve Bank of India (RBI) on Thursday maintained its dovish stance and said continued policy support was warranted to help the economic recovery.
“There was some enthusiasm post the (RBI) policy. But, with global cues, again the (foreign) outflows are going to happen,” said Anita Gandhi, director at Arihant Capital Markets, adding that the outflows would continue if the U.S. rate hikes happened in March.
Foreign investors have sold a net $5.58 billion in Indian equities so far this year, Refinitiv data showed, compared with a net purchase of $5.08 billion in the same period last year.
Global stocks also fell on Friday after data showed that U.S. consumer prices rose solidly in January, leading to the biggest annual increase in inflation in 40 years.
In Mumbai trading, the Nifty IT index (.NIFTYIT) was the top loser among sub-indexes, falling 2.7%.
“IT valuations are quite high. Though last-quarter numbers were pretty good, it is only Infosys where there is a talk of margin expansion or better guidance. Unless we are going to have an exponential rise (in results), the valuation is not justified,” Gandhi said.
Among individual stocks, staffing service provider Quess Corp (QUEC.NS) rose as much as 9.7% after a jump in quarterly profit.
Zomato Ltd (ZOMT.NS) tumbled 6.9%, after the Indian food delivery firm posted tepid sequential gross order value growth in the third quarter.