India's Nifty, Sensex subdued; small, mid-caps extend record run

BENGALURU, Sept 7 (Reuters): Indian benchmark indexes inched lower on Thursday, weighed by worries that US interest rates will remain higher for longer, while domestic focussed small and mid-cap indexes continued their record run.
The Nifty 50 index and S&P BSE Sensex were down 0.1 per cent, each at 19,591 and 65,807 at 10:32 a.m. IST.
The small-caps and mid-caps were up 0.4 per cent and 0.4 per cent, respectively, continuing to outperform the blue-chip benchmarks and hitting fresh record highs.
"There is froth in the small-cap segment, which is driven by momentum," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Small and mid-cap stocks have risen about 31 per cent and 28 per cent, respectively so far this year compared with 8 per cent gains in benchmark indexes.
The US dollar surged to a six-month high and Treasury yields rose on expectations that US interest rates will remain higher for longer, while Brent crude price has surged 5 per cent in the past two weeks.
A major concern in the market is the Brent crude rising above $90 with negative implications for India's macros and inflation, Vijayakumar said, adding that foreign investr selling has been triggered by the rising bond yields and stronger dollar.
Foreign portfolio investor (FPI) inflows in Indian equities were at a four-month low of 122.62 billion rupees ($1.48 billion) in August.
Among indexes, the public sector bank index was up 0.6 per cent, while consumer index dropped 0.2 per cent, driven by 2.4 per cent fall in Tata Consumer.
Tata Consumer had risen on over 4 per cent on Wednesday after Reuters reported that the company was in talks to buy at least 51 per cent of popular Indian snack food maker Haldiram's.
Coal and power stocks were also gainers in early trade with Coal India, Power Finance Corp, REC rising over 1 per cent. Coal India has surged 12 per cent in the past week on higher demand for the commodity.