Indian Shares Fall on Concerns of Elevated U.S. Interest Rates

Indian shares experienced a decline on Tuesday, primarily driven by auto and energy stocks, as concerns over elevated U.S. interest rates weighed on investor sentiment. The NSE Nifty 50 index was down 0.78% at 19,484.70, while the S&P BSE Sensex lost 0.71% to 65,354.89 as of 10:03 a.m. IST.

The dip in Indian shares mirrored the trend in Asian markets, which were also impacted by worries about a prolonged high interest rate regime following hawkish comments from U.S. Federal Reserve Chair Jerome Powell and Vice Chair for Supervision Michael Barr. Additionally, concerns over China’s economic recovery further contributed to the risk aversion in the market.

Auto stocks, including Eicher Motors, witnessed a decline of 0.8%. Eicher Motors, in particular, faced a setback as its motorcycle sales fell 4% in September, causing the company’s shares to shed over 4%, making it the biggest loser on the blue-chip Nifty 50.

Financials and information technology (IT) sectors, which hold significant weightage in the market, also experienced a decline of 0.5% each. However, Vedanta managed to gain over 3% after announcing a split into six separate businesses, while ONGC lost 3.7% and dragged the energy index 1% lower.

Foreign portfolio investors (FPIs) also added to the pressure on domestic equities, with data showing that FPIs offloaded shares worth 147.68 billion rupees in September, marking the end of a six-month buying streak. FPIs have continued to be net sellers in the market for the past nine sessions.

Analysts believe that while a correction in small- and mid-cap stocks cannot be ruled out due to frothiness in select pockets, the benchmark Nifty 50 is likely to consolidate in a narrow range and close the year near the 20,000 levels.

Despite the current market conditions, experts remain cautiously optimistic about the future outlook, considering the potential consolidation and the overall resilience of the Indian stock market.