Mumbai: Indian equities fluctuated, with industrials outweighing gains in consumer stocks, as investors weighed the prospects for a US interest-rate increase next month and its impact on capital flows.
Tata Steel Ltd and Lupin Ltd were the biggest decliners on the S&P BSE Sensex. Cigarette maker ITC Ltd, which has the third-highest weighting on the index, jumped after announcing a plan to issue free shares. Hindustan Unilever Ltd (HUL) rose after capping a five-week losing streak on Friday, the longest in more than three years.
The Sensex closed 0.28%, or 71.54 points, lower at 25,230.36 in Mumbai, after rising as much as 0.9% earlier, while NSE Nifty 50 Index lost 0.24%, or 18.65 points, to 7,731.05. The indexes declined last week on concern the US Federal Reserve may increase borrowing costs as early as next month. Higher rates in the US would temper inflows to emerging markets. Global funds have bought $271 million of Indian shares this month, versus $585 million in April and $4.1 billion in March, which was the biggest inflow in three years.
“The market is in a tight range, and any upside will be capped unless clarity emerges on the Fed interest rates and the monsoon’s progress,” Paras Bothra, a Mumbai-based vice president of equity research at Ashika Stock Broking Ltd., said by phone. “It will take a lot of good news for the Nifty to break the 8,000-mark.”
Odds of an interest-rate increase next month are now at 28%, up from 4% a week ago. Federal Reserve policy makers indicate a hike in June would be likely if the economy continues to improve. John Williams, president of the Fed Bank of San Francisco, said Sunday on Fox News the U.S. economy should be solid enough to merit raising rates in 2016.
Southwest monsoon has hit the Andaman and Nicobar island two days before its normal date, but a cyclone in the Bay of Bengal is likely to weaken its progress, likely delaying the onset of the four-month rainy season, the weather bureau said last week. The agency has predicted the monsoon to set over the southern Kerala state on 7 June, a delay of six days from the normal onset date of 1 June.
ITC soared 5.29%, extending last week’s 3.4% gain. The company announced on Friday toward close of trade it will give a free share for every two held. It also reported fourth-quarter net income of Rs.2,500 crore, matching the analysts estimate Rs.2,520 crore. Sales of Rs.10,060 crore beat the estimate Rs.9790 crore.
Tata Steel declined 2.88% in a third day of decline. Lupin shed 2.57%.
Adani Ports and Special Economic Zone Ltd rose 1.77%, set for its best two-day gain in six weeks. Power Grid Corp. of India Ltd rose for a third day after the BSE Ltd said the company will be added to the starting next month.