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Domestic shares are set to open little changed on Thursday, following profit-booking in the previous session, with focus on small- and mid-cap stocks ahead of the stress test results of mutual funds in those segments.
The GIFT Nifty was trading at 22,078 as of 08:15 a.m. IST, indicating that the Nifty 50 will open near Wednesday's close of 21,997.70.
The blue-chip indexes, Nifty 50 and Sensex, logged their worst session in nearly two months, weighed by profit-booking at near record levels.
The broader, more domestically-focussed small- and mid-caps cracked 5.28% and 4.4% respectively, to log their worst session in two years.
They are down 14.4% and 7.7%, respectively, from the record high levels hit on February 8.
The fall came following concerns raised by India's markets regulator about significant inflows into small- and mid-cap funds.
The results of the stress tests conducted by mutual funds will be disclosed by Friday, offering insights into the ability of small- and mid-cap fund schemes to withstand sudden redemption pressures from stress situations.
"Ongoing scrutiny from the Securities and Exchange Board of India, along with the pending outcome of mutual fund stress tests, triggered profit-booking," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
Investors are also awaiting India's wholesale price index (WPI) inflation data, due at 12 p.m. IST.
Foreign portfolio investors (FPIs) sold Indian shares worth Rs 4,595 crore ($555 million), on a net basis on Wednesday. Domestic institutional investors (DIIs) bought Rs 9,094 crore of stocks.
Asian markets were muted at the open. Most Wall Street equities dropped overnight, ahead of US producer price index data, due post closing bell.
STOCKS TO WATCH
** Tata Motors: Company said it will build $1.1 billion plant to manufacture vehicles in Tamil Nadu.
** Hindustan Aeronautics: Defence Ministry signed contracts worth Rs 8,073 crore with the company for acquisition of 34 advanced light helicopters and associated equipment for Indian Army.
** KEC International: Company secured orders worth Rs 2,257 crore across business verticals. ($1 = 82.8330 Indian rupees)
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