Indian shares end lower in volatile session ahead of RBI's rate decision

A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange building in Mumbai
A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India June 20, 2016. REUTERS/Danish Siddiqui/Files

BENGALURU, Feb 7 (Reuters) - Indian shares struggled for direction on Tuesday before closing lower, as markets see-sawed between optimism that the Reserve Bank of India will pause rate hikes after Wednesday, and worries that the Fed was likely to keep upping rates for longer.

The Nifty 50 index (.NSEI) closed 0.24% lower at 17,721.50, while the S&P BSE Sensex (.BSESN) fell 0.37% to 60,286.04. Both the benchmarks swung between 0.3% gains and 0.75% losses during the session.

FMCG (.NIFTYFMCG) stocks fell over 1.1%, dragged by heavyweight ITC (ITC.NS), which has taken a breather after rallying to fresh record highs over the last three sessions.

High weightage financials (.NIFTYFIN) rose 0.13% and capped losses.

The RBI is expected to pause after Wednesday's expected 25 basis points rate hike as it tries to support economic growth and tame inflation. read more

Meanwhile, Wall Street equities extended their fall overnight after data on Friday showed resilient U.S. jobs markets that heightened concerns that the U.S. Federal Reserve will keep rates higher for longer. FEDWATCH

Investors await a speech by Fed chair Jerome Powell due later in the day, for potential cues on the Fed's rate hike trajectory.

"There is a shift happening towards risk-off sentiment in global equities after U.S. jobs data," said Aishvarya Dadheech, director and fund manager at Ambit Asset Management.

Analysts also said that the persistent foreign selling in Indian equities was a cause for concern.

Nineteen of Nifty 50 stocks advanced with Adani Enterprises (ADEL.NS), up over 15% and Adani Ports (APSE.NS) among the top gainers, while Tata Steel(TISC.NS) and Hindalco(HALC.NS) declined the most.

The rise in key Adani stocks comes after the National Stock Exchange revised circuit limits of Adani Green and Adani Transmission to 5% from 10%, to prevent large movements in price of stocks in a very short time. read more

The rebound comes after the recent selloff in Adani group stocks, which has caused a rout of over $100 billion in market capitalisation after U.S. short seller Hindenburg's report on Jan. 24.

($1 = 82.7220 Indian rupees)

Reporting by Bharath Rajeswaran in Bengaluru; Editing by Nivedita Bhattacharjee

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