Banks drag Indian shares lower, Fed outlook in spotlight
Updates as of close
By Hritam Mukherjee
Dec 18 (Reuters) -Indian shares declined on Wednesday, led by heavyweight financial stocks, ahead of the Federal Reserve's policy decision, with investors cautious that the U.S. central bank could signal fewer rate cuts ahead.
The Nifty 50 .NSEI closed 0.56% lower at 24,198.85 points,while the BSE Sensex .BSESN fell 0.62% to 80,182.2.
The benchmarks have lost over 2% so far this week, with foreign outflows prompting the Nifty 50 to close below its 50-day moving average for the second straight session on Wednesday.
Ten of the 13 major sectoral indexes fell on the day, with financials .NIFTYFIN down 1.23%. The more domestically-focussed small .NIFSMCP100 and midcaps .NIFMDCP100 dipped 0.9% and 0.6%, respectively.
While it is near-certain that the Fed will deliver a quarter-point rate cut later on Wednesday, investors are jittery about its 2025 rate outlook amid sticky inflation and a relatively strong economy.
"Foreign investors are contending with the possibility that in 2025 the Fed may not need to cut rates as aggressively as anticipated earlier this year," Abhishek Goenka, founder of IFA Global said.
U.S. rate cuts typically help emerging market assets, such as Indian equities, as they boost foreign inflows.
Foreign investors offloaded Indian stocks worth about 64.1 billion rupees ($755 million) on a net basis on Tuesday. Data for Wednesday will be released after markets close.
On Wednesday, Nifty 50 heavyweights HDFC Bank HDBK.NS and ICICI Bank ICBK.NS shed 1.2% and 1.5%, respectively, and were the biggest drags on the index.
Adani Green Energy ADNA.NS fell 3.3%. It has lost about 5% since Reuters reported on Tuesday that a deal at the heart of bribery allegations against Adani executives was approved against the advice of Indian officials.
Defying wider declines, onlinepayments firm MobiKwik ONEM.NS soared 89% and budget retailer Vishal Mega Mart VSSL.NS jumped 44% in their trading debuts.
($1 = 84.9040 Indian rupees)
Reporting by Hritam Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips, Sonia Cheema and Eileen Soreng
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