Indian shares fall on inflation worries, hawkish cenbanks

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A bird flies past the Bombay Stock Exchange (BSE) building in Mumbai, India, January 31, 2020. REUTERS/Francis Mascarenhas

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BENGALURU, Dec 17 (Reuters) - Indian shares posted broad-based declines on Friday, pressured by foreign fund outflows, and as global central banks took a hawkish stance and warned of surging inflation.

The NSE Nifty 50 index (.NSEI) fell 1.53% to 16,985.20 and the benchmark S&P BSE Sensex (.BSESN) dropped 1.54% to 57,011.74. Both the indexes shed nearly 3% this week after two consecutive weeks of gains.

"The emergence of a new COVID-19 variant, Omicron, inflation concerns and a hawkish turn of global central bankers have led to an increase in volatility in equity markets worldwide, including India," said Shibani Kurian, head of equity research at Kotak Mahindra Asset Management Co.

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"With inflation increasing in countries across the world, all eyes are on central bankers and the pace of liquidity normalisation adopted by them."

This week, the Bank of England became the world's first major central bank to raise interest rates since the pandemic hammered the global economy, following the U.S. Federal Reserve in signalling the risk of raging inflation. read more

As of Thursday's close, foreign institutional investors have sold $728 million worth of Indian equities this week and $1.73 billion this month, according to Refinitiv Eikon.

The Nifty public sector bank index (.NIFTYPSU) and real estate index (.NIFTYREAL) were among top percentage losers on the day, falling 3.6% and 3.9%, respectively.

The information technology (.NIFTYIT) index was the lone gainer among sectoral indexes, ending up 1.35%, after Accenture Plc (ACN.N) forecast better-than-expected second-quarter revenue and raised its annual business outlook. read more

Only five of the Nifty 50 constituents ended higher, with Wipro (WIPR.NS) leading gains with a 4.1% jump.

Shares of Indiabulls Housing Finance (INBF.NS) fell 8.2% after the company said promoter Sameer Gehlaut sold an 11.9% stake and would resign from the board.

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Reporting by Nallur Sethuraman in Bengaluru; Editing by Amy Caren Daniel

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