Indian equities mixed as Adani turmoil offsets Fed rate pause optimism

On Thursday, Indian equity markets delivered a portrait of internal conflict. The Sensex, the thirty-stock benchmark, rose 224 points to close at 59,932, a gain of 0.38 percent. The broader Nifty index, however, slipped 5.90 points to 17,610, a decline so modest it barely registered as movement. The day's trajectory told the real story: the Sensex had climbed as high as 60,007 before retreating, then clawing back ground by day's end. This was a market fighting itself.

The tension came from two opposing forces. Globally, equities had moved higher after the Federal Reserve raised interest rates by a quarter point, as expected. But Fed Chair Jerome Powell's language shifted the mood: he described a "disinflationary" process already underway, which investors read as a signal that rate increases might soon pause. Markets in Seoul, Tokyo, and Shanghai all closed in positive territory. European equities were climbing during mid-session trading. The signal from Washington was clear enough to lift sentiment across continents.

But in India, a domestic storm was drowning out the global optimism. Adani Enterprises, the flagship of the sprawling Adani conglomerate, had announced late Wednesday that it would abandon its planned 20,000-crore rupee follow-on public offering, despite the fact that the offering had been fully subscribed on its final day. The company said it would return the proceeds to investors. The market's response was swift and severe. Adani Enterprises fell 26.50 percent. Across the group, the damage spread: Adani Transmission dropped 10 percent, Adani Green Energy fell 10 percent, Adani Total Gas declined 10 percent, and Adani Ports slid 6.13 percent.

The ripple effects extended far beyond the Adani holdings. Utilities, the sector most exposed to the conglomerate's influence, tanked 3.78 percent. Power stocks, oil and gas, commodities, and energy all retreated sharply. Investors were not simply selling Adani; they were exiting entire sectors tied to the group's ecosystem. Vinod Nair, head of research at Geojit Financial Services, observed that despite a growth-oriented budget from the government, falling crude oil prices, and positive momentum in global markets, India's domestic market could not gain traction. The Adani situation, he said, was creating a ripple effect that dampened investor appetite. He also noted that India's premium valuation relative to other emerging markets was working against performance, especially when those other markets were expecting economic upside.

What did gain ground were technology and banking stocks. ITC, the diversified conglomerate, jumped 4.74 percent to lead the Sensex gainers for a second consecutive day. IndusInd Bank, Hindustan Unilever, Infosys, Wipro, HCL Technologies, Tata Consultancy Services, and ICICI Bank all moved higher. But these gains were not enough to offset the broader selling pressure. NTPC, HDFC, Titan, Tata Steel, Power Grid, Bajaj Finance, and HDFC Bank were among the day's prominent losers. Titan, the Tata group's jewelry and watches business, fell 1.80 percent after reporting a 9.78 percent decline in consolidated net profit to 913 crore rupees for the December quarter, citing higher expenses.

Shrikant Chouhan, head of equity research at Kotak Securities, described the day as one where the Adani rout "played havoc" with the benchmark indices, which gyrated sharply intraday before recovering on buying in IT and banking stocks. But the damage in power, energy, oil and gas, and utilities stocks was substantial, he noted, as investors continued to exit those sectors amid dampening sentiment. The broader market showed some resilience: the BSE smallcap gauge climbed 0.36 percent and the midcap index gained 0.21 percent. Among sector indices, FMCG rallied 2.18 percent, IT gained 1.65 percent, and tech rose 1.60 percent. But these gains were overshadowed by the 3.78 percent plunge in utilities.

International oil prices dipped 0.29 percent to 82.78 dollars per barrel. The Indian rupee weakened, falling 40 paise to close at 82.20 per US dollar. Foreign institutional investors, however, turned into buyers, purchasing shares worth a net 1,785.21 crore rupees on Wednesday, suggesting that some global money still saw value in Indian equities despite the turmoil. The question hanging over the market was whether the Adani saga would continue to weigh on sentiment or whether the positive signals from the Federal Reserve and global markets would eventually reassert themselves.