India's Sensex hits record before hawkish Fed fears weigh

BENGALURU, June 22 (Reuters) - Indias blue-chip Sensex index hit a record high on Thursday, before giving up those gains on concerns of high valuations and as IT stocks dropped after U.S. Federal Reserve Chair Jerome Powell indicated further rate hikes this year.

The 30-stock Sensex (.BSESN) rose as much as 0.12% to a new record high of 63,601.71 in pre-open trade, before reversing gains.

It was last off 0.05% at 63,489.08 as of 10:32 a.m. IST, while the 50-stocks Nifty 50 (.NSEI) 0.03% to 18,851.05.

The Nifty is less than 40 points shy of its record, while the broader midcap (.NIFMDCP100) and smallcap indexes (.NIFSMCP100) are hovering around record-high and 52-week-high levels, respectively.

The indexes have rallied recently on strong domestic growth data, cooling inflation, foreign inflows and healthy corporate earnings, but the gains have sparked concerns over valuation.

\“While it is a happy moment that markets are at or near record levels, it is also time for investors to be extra vigilant given the rich premiums and valuations,\” said Srikanth Subramanian, CEO, Kotak Cherry.

Seven of the 13 major sectoral indexes declined. Financials (.NIFTYFIN), which have the biggest weight among all sectors, rose 0.32%, helping offset the losses in other sectors.

The biggest of those losses was in IT stocks (.NIFTYIT), which shed 0.6%.

The slide in IT firms, which earn a significant share of their revenue from the United States, came after Powell reiterated the possibility of two 25-basis point hikes this year.

Wall Street equities fell overnight, and Asian markets were subdued.

Among individual stocks, Lupin (LUPN.NS) lost over 2% after several analysts said that the upside from the U.S. FDA approval for its drug to treat chronic obstructive pulmonary disease (COPD) would be limited.