BENGALURU: Indian shares were volatile in morning trading on Monday, mirroring financials, ahead of the Union budget, while select Adani Group stocks arrested the recent slide after a short-seller attack on group companies triggered a sell-off over the previous two sessions.

The Nifty 50 index was down 0.36% at 17,540.65 as of 11:03 a.m. IST, while the S&P BSE Sensex fell 0.29% to 59,156.62. Both the indexes swung between gains of 0.6% and losses of 0.9%, in step with the intraday trajectory of high-weightage financials, which is down 0.53%, as of 11:03 a.m. IST.

Financials had dragged the index over the previous two sessions. Indian equities had tumbled to a three-month low on Friday, dragged by a short-seller attack on Adani group companies, which triggered a selloff in banks.

The group faces a critical session today with the secondary share sale of the flagship Adani Enterprises seeing only 1% subscription on Friday. “The markets will remain very volatile ahead of the budget,” Aishvarya Dadheech, director and fund manager at Ambit Asset Management said.

Analysts also cited fears of a drawdown in financials on the back of the scathing report by Hindenburg Research that raised concerns about the books of Adani companies.

Adani Enterprises rose as much as 10% before paring gains to advance 2.64% and was among the top Nifty 50 gainers, while Adani Ports reversed the climb. ACC and Ambuja Cements pared the gains from earlier in the session to trade up marginally.

Adani Group fallout drags Indian shares to 3-month low

Twenty-one of the Nifty 50 constituents advanced while 29 declined. Shares of Bajaj Finance rose nearly 5% to a four-month high of 6,040 rupees after its third quarter earnings beat estimtes. Foreign institutional investors sold 83.72 billion rupees ($1.03 billion) worth of shares over the last two sessions since Hindenburg’s report.

Investors will also shift focus to India’s Union budget on Feb. 1, with the government’s fiscal consolidation path and borrowing calendar for fiscal 2024 as triggers.

Besides the Union budget, analysts also said rate decisions by global central banks and January automobile sales data would determine the mood in the market. The US Federal Reserve, European Central Bank and the Bank of England are scheduled to announce their rate decisions, later this week.

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