Indian shares muted as Fed, oil and IPO rush dent risk appetite

Indian equities saw minimal movement on Thursday as a combination of factors dampened investor appetite for risk. The U.S. Federal Reserve raised interest rates and issued a stern tone via its hawkish commentary. Simultaneously, oil prices remained elevated, and a wave of Initial Public Offerings (IPOs) created a crowded market for new shares.

Despite these headwinds, the National Stock Exchange's $2.3 billion IPO for its largest bourse opened for bidding, with investors subscribing to about 36% of the allotment by 3:30 p.m. IST. The Nifty 50 index gained 0.23% to 23,270.6, while the BSE Sensex slipped by 0.03% to 74,314.59, completing the day in positive territory as it had risen by 0.6% and 0.5% intraday.

The Nifty and Sensex saw additional gains of 0.3% and 0.10%, respectively, prior to the final auction. Most market participants viewed the regulator's weekend plans to overhaul derivatives settlement as potentially beneficial in curbing volatility during expiry days. Twelve out of the 16 major sectoral indexes rose, with small-cap and mid-cap indices also posting gains of 0.8% and 0.9%, respectively.

The auto sector index increased by 1%, marking a 1.5% advance over two sessions. However, this index declined by approximately 4% over the previous four days. The Nifty index had two consecutive trading days of gains after a decline of roughly 6% over the past five weeks. Traders attributed the recent uptick to short-covering in select markets, while cautioning that risk sentiment remains cautious due to high crude oil prices and tightening global monetary conditions following the U.S. rate increase.

Ankita Pathak, head of global investments at Ionic Asset, posited that another Fed rate hike is a possibility in December 2026, contingent on the evolving macroeconomic landscape, particularly crude prices. She also suggested that India may need to contemplate a rate hike at its subsequent policy meeting following the Fed's decision.

Among the major Tata group companies, Tata Motors, Tata Steel, and Tata Investment showed gains between 2.3% and 5.5%. The board of Tata Sons decided to grant N Chandrasekaran a fresh five-year term as executive chairman, according to a Reuters report based on information from a source familiar with the matter.