Indian equity benchmarks opened largely flat on Thursday, with the Nifty hovering around the 22,600 mark as gains in IT and pharma stocks were offset by weakness in financial, FMCG and auto stocks.
The Nifty opened at 22,599.05, down 4 points or 0.02 per cent, while the Sensex started at 72,668, up 29.30 points or 0.04 per cent.
Among sectors, Nifty IT, Nifty MidSmall Healthcare and Nifty Pharma were the top gainers, rising by up to 0.59 per cent.
Metal, consumer durables and chemical stocks also traded marginally higher.
On the other hand, Nifty Financial Services ex-Bank and Nifty FMCG declined by up to 0.38 per cent.
Market experts said the RBI's calibrated tightening stance could put pressure on equity valuations, as higher interest rates make fixed-income investments relatively more attractive.
They expect investor preference to shift marginally towards relatively interest-inelastic sectors such as pharmaceuticals.
Experts also noted that growth stocks have continued to attract investor interest despite high valuations, while value stocks have remained subdued.
"Sustained selling by foreign investors in large-cap stocks, coupled with the US 10-year Treasury yield staying above 5.3 per cent, could keep large-cap stocks under pressure," they said.
According to market experts, the Nifty's multiple attacks at the 22,574 level on Wednesday point towards an extended period of consolidation before the market establishes a clear direction.
"Though considerably weakened, the 23,100-22,000 view is still in play, with downside marker at 22,439," they said.
Experts added that a sustained reversal in the market trend would require foreign investors to turn buyers. They also said value stocks could offer opportunities over the longer term.
Foreign institutional investors remained net sellers on Wednesday, offloading equities worth more than Rs 6,121 crore.
Domestic institutional investors, however, provided some support and purchased equities worth around Rs 4,596 crore.
Market sentiment remained cautious amid concerns over elevated US Treasury yields and oil prices. Asian markets also traded cautiously following a softer session on Wall Street.
