Indian shares surrendered opening gains on Wednesday as broad-based selling pressure countered a surge in ITC following British American Tobacco's (BAT) stake sale plans, while small- and mid-caps cracked ahead of stress test results.

The blue-chip NSE Nifty 50 index lost 0.18% to 22,296.20, while the BSE Sensex added 0.01% to 73,666.48, as of 10:30 a.m. IST.

Both benchmarks opened with a 0.3% gain. Eight of the 13 major sectors logged losses.

The broader, domestically-focussed small- and mid-caps dropped 2.8% and 2.1%, underperforming the benchmarks.

Small- and mid-caps are down 6% and 3.5%, respectively, this week, while the Nifty 50 dropped 0.7%, after markets regulator on Monday

flagged

potential froth in these segments.

The stress tests of mutual funds, as directed by the Securities and Exchange Board of India, will be disclosed from March 15.

Analysts said that stress test disclosures, aimed at assessing the time taken to exit positions under stress, will likely add to the pressure on the segments.

"Given the historical volatility in small- and mid-caps, it is crucial for investors to exercise caution," said Gaurang Shah, senior vice president at Geojit Financial Services.

State-owned banks and energy fell 1.5% and 2.5%, respectively, after their recent outperformance over blue-chip stocks.

PSU banks and energy stocks have jumped 87% and 70%, respectively in fiscal year 2024, far outpacing the Nifty 50's 29% rise.

Fast-moving consumer goods gained 1.8%. ITC jumped 6%. About 3.5% of the company's shares changed hands in a block deal, according to LSEG data .

Reuters reported on Tuesday that BAT planned to sell ITC shares in a $2.03 billion deal, citing term sheet.

Asian markets gained, undeterred by the slightly hotter-than-expected U.S. inflation data .

India's retail inflation eased slightly in February, but was still higher than expectations.

 

 

 

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sohini Goswami and Savio D'Souza)