Indian shares drop as IT stock slide ahead of Fed decision

BENGALURU, Oct 31 (Reuters) - Indian shares fell on Tuesday, tracking the weakness in the broader Asian market and dragged by a drop in information technology (IT) stocks in the run-up to the U.S. Federal Reserves policy decision later this week.

The NSE Nifty 50 index (.NSEI) was down 0.15% at 19,113.20 as of 10:16 a.m. IST, while the S&P BSE Sensex (.BSESN) fell 0.19% to 63,994.14.

Asian markets declined after the Bank of Japan loosened its grip on long-term interest rates by tweaking its bond yield control policy, in a step to end its stimulus programme.

On the home front, seven of the 13 major sectoral indexes advanced.

IT stocks (.NIFTYIT) lost 0.5%, ahead of the Feds policy decision due after the bell on Wednesday.

While the Fed is widely expected to keep rates unchanged, its commentary on future rate trajectory and inflation control could influence domestic equities in general and IT stocks in particular, two analysts said. IT companies earn a significant share of their revenue from the U.S.

Realty stocks (.NIFTYREAL) added over 1.5%, led by a 2% rise in DLF (DLF.NS) and 4% in Macrotech Developers (MACE.NS) on strong quarterly results due to robust housing demand.

The mid- (.NIFMDCP100) and small-cap indexes (.NIFSMCP100) outperformed the benchmarks, rising 0.6% and 0.8%.

\“The slide earlier in the month has almost eliminated most of the froth in the markets, especially in the mid-cap segment,\” said Varun Saboo, head of equities at Anand Rathi Shares and Stock Brokers.

Brent crude futures rose to $88 per barrel on Tuesday, after a 3% drop in the previous session, on supply concerns due to the Middle East conflict. Rising oil prices are a negative for importers of the commodity like India.

The Nifty 50 has lost 2.63% so far in October, on course for its worst month since January. Foreign investors have offloaded 228.50 billion rupees ($2.74 billion) worth of shares in October so far - the most selling since January.

Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Savio DSouza