By Bharath Rajeswaran and Dimpal Gulwani
BENGALURU (Reuters) -Indian shares erased most of their early gains on Friday after hitting record highs for the second straight session as IT stocks fell on worries that it would be a while before the US Federal Reserve cuts rates.
The blue-chip NSE Nifty 50 was up 0.04% at 22,976.55 points, while the S&P BSE Sensex added 0.04% to 75,448.43, as of 11:25 a.m. IST.
Eight of the 13 major sectors logged losses. The U.S.-rate sensitive IT sector dropped 0.25% after strong labour market and business activity data fueled concerns over tighter-for-longer monetary policy in the world’s largest economy.
IT companies earn a significant share of their revenue from the U.S.
“Markets are now clear that there could be just one or two rate cuts by Federal Reserve this year, at best,” said Aishwarya Dadheech, founder and chief investment officer at Fident Asset Management.
This likely delay in rate cuts, alongside weakness in client spending and muted guidance could lead to time correction in IT stocks for another two quarters, Dadheech added.
Indian benchmarks closed at all-time high levels and posted their best session since March 1 on Thursday as the Reserve Bank of India’s record dividend to the government boosted financials.
The blue-chip Nifty 50 and Sensex rose about 0.1% each, hitting record highs early on Friday before losing steam. However, they are up 2.3% each for the week, on course to post their best week since early February.
“The RBI’s record surplus could also trigger a return of foreign inflows,” Dadheech said.
Honasa Consumer jumped 3% after the Mamaearth parent posted a fourth-quarter profit.
Drug maker Biocon gained 4%, on signing a licensing and supply deal with South Korean firm Handok.
(Reporting by Bharath Rajeswaran and Dimpal Gulwani in Bengaluru; Editing by Mrigank Dhaniwala, Sohini Goswami and Nivedita Bhattacharjee)
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