Indices dip as Fed hints at interest rate hikes; mid-cap index hits record high

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India’s blue-chip indices snapped a three-day winning streak on Thursday after the US Federal Reserve hinted at more rate hikes later this year, but the domestic index of mid-market companies rose to a new record high.

The Nifty 50 index closed down 0.36 percent at 18,688.10, while the S&P BSE Sensex lost 0.49 percent, at 62,917.63. Both indices are about 1 percent shy of their all-time highs.

Eight out of 13 sector indices fell. Information technology companies, which get a large share of revenue from the United States, lost more than 0.5 percent after the Federal Reserve kept interest rates unchanged, as expected, but signaled the need for a hike. borrowing costs.

On the other hand, the index of medium companies set a new record, while the index of small companies rose 0.15 percent to its highest level in 52 weeks.

More domestically focused indices have rebounded strongly — the index of mid-caps has risen nearly 19.5 percent since hitting a 2023 low in April — in the past few weeks, outpacing their blue-chip counterparts, as inflation subsides and economic growth picks up. The central bank kept interest rates.

“Not only benchmarks, but small and medium-sized companies, have seen an exponential rise in recent weeks,” said Saurabh Jain, associate vice president of retail equity research at SMC Global Securities.

“The markets will likely pause and only a slight correction will be healthy.”

Fast-moving consumer goods (FMCG) stocks advanced more than 0.5 percent. Jain said the gradual improvement in rural demand and lower prices for key raw materials such as crude oil and soda ash had helped lift stocks of consumer goods.

Among individual stocks, Fortis Healthcare and Apollo Hospitals rose more than 4 percent each after JP Morgan rated the shares “overweight.”

On the other hand, Hero MotoCorp shares lost 3.02 percent after Reuters reported that the Ministry of Corporate Affairs ordered an investigation to assess the company’s role in a case related to the alleged transfer of funds.