Indian shares slip on rate hike worries, banks blunt losses

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A man looks at a screen displaying budget news, on a facade of the Bombay Stock Exchange (BSE) building in Mumbai

BENGALURU (Reuters) -Indian shares closed lower on Wednesday, dragged by sharp losses in tech stocks on rating downgrades and U.S. interest rate hike worries, although stronger bank stocks arrested the decline.

The Nifty 50 ended 0.37% lower at 18,003.75 and the S&P BSE Sensex slipped 0.37% to 60,346.97, after briefly entering positive territory in late afternoon trade.

The indexes had dropped 1.65% and 1.91%, respectively, at open, after an unexpected increase in U.S. inflation stoked fears of aggressive rate hikes and roiled world markets. [MKTS/GLOB]

The Nifty IT index was the hardest hit in Mumbai, sliding 3.4%, with heavyweight IT services majors Infosys and Tata Consultancy Services dropping around 4.5% and 3.4%, respectively.

Goldman Sachs downgraded Tata Consultancy Services and Infosys to "sell" from "buy" and slashed target prices citing a potential slowdown in dollar revenue growth in the face of a looming macroeconomic stress.

Most other sub-indexes recovered during the session, led by banking and metal stocks, with analysts saying India was better placed to weather the inflation tumult with a stronger growth trajectory than other economies.

Persistent foreign investor purchases have also propped up the domestic market.

The Nifty Bank index jumped 1.3% to a record closing high, boosted by a 2.5% climb in largest lender State Bank of India and 4.5% surge in IndusInd Bank.

Vedanta shares surged 10.1% after the conglomerate said it will look at creating a hub to manufacture Apple's iPhones and TV equipment, along with possibly diving into the electric vehicle sector.

The Nifty Metal index climbed 1.6%.

India's most valuable company Reliance Industries slipped 1.2%.

(Reporting by Chris Thomas in Bengaluru; Editing by Neha Arora)