Indian shares muted as caution over elevated valuations offsets IT uptick

BENGALURU, Aug 1 (Reuters) - Indian shares closed little changed on Tuesday, as a broad sectoral slide on caution over elevated valuations overpowered the uptick in IT stocks.

The Nifty 50 (.NSEI) index settled 0.10% lower at 19,733.55, while the S&P BSE Sensex (.BSESN) fell 0.10% to 66,459.31.

Domestically linked small-caps (.NIFSMCP100) and mid-caps (.NIFMDCP100) rose 0.68% and 0.03%, respectively, outperforming the blue-chip indexes and hitting fresh 52-week and all-time highs.

Nine of the 13 major sectoral indexes declined, with realty index (.NIFTYREAL) losing 1.77%, dragged by weak earnings from Oberoi Realty (OEBO.NS) and report of stake sale in DLF (DLF.NS) by top shareholders.

A revival in consumption-linked sectors such as auto, fast-moving consumer goods (FMCG) and realty could be delayed due to erratic monsoons, two analysts cautioned.

IT (.NIFTYIT), however, advanced 1.20% after adding 1.49% on Monday on signs of moderation in U.S. inflation. IT firms earn a significant share of their revenue from the United States.

\“From a valuation perspective, the markets seem to be almost fully priced,\” said Raghvendra Nath, managing director at Ladderup Wealth Management.

\“Any further rise in equities will be incremental and depend on earnings growth trajectory and the sustainability of foreign inflows.\”

Foreign portfolio investors were net buyers in Indian equities over the last five months, triggering monthly gains in the blue-chips during the period. Since March 1, the Nifty 50 has risen 14.04%.

Among individual stocks, state-owned utility Power Grid Corporation of India (PGRD.NS) lost 5.36% after posting a more than 5% slide in first-quarter profit. It was Nifty 50s top loser.

Two-wheeler maker Hero MotoCorp (HROM.NS) fell 3.17% after Indias enforcement agency searched the residence of its chairman Pawan Munjal, according to a source aware of the matter.

Coal India (COAL.NS) jumped 4.84% and was the top Nifty 50 gainer after logging 13.4% year-on-year growth in July.

($1 = 82.2500 Indian rupees)