* Nifty 50, Sensex down 0.3% each
* Fed rate cut shows gravity of coronavirus situation - analyst
* Financial stocks biggest drag
By Chris Thomas
March 4 (Reuters) - Indian shares edged lower on Wednesday as an emergency 50 basis point rate cut by the U.S. Federal Reserve failed to calm investor nerves about the debilitating impact of the coronavirus outbreak.
The surprise rate cut on Tuesday was accompanied by Fed Chairman Jerome Powell’s acknowledgement of an uncertain outlook and his view that rate cuts will not restore supply chains, sending U.S. stocks sharply lower overnight and gold higher.
Indian equities, which had rallied on Tuesday on hopes of a coordinated effort by major central banks to combat the economic fallout of the virus, were kept in check on Wednesday by losses in heavyweight financials.
“Markets are uneasy as the Fed’s action has shown the gravity of the situation and Powell’s comments have indicated that the cut alone will not solve the problem,” said Saurabh Jain, assistant vice president research, SMC Global Securities.
The NSE Nifty 50 index fell 0.25% to 11,276 by 0358 GMT, while the benchmark S&P BSE Sensex was down 0.26% at 38,523.66.
“From the monetary policy angle, ensuring adequate availability of liquidity for stressed sectors is more important than rate cuts. And of course, fiscal measures too could be useful at this juncture,” said Kunal Kundu, India economist with Societe Generale.
However, analysts said investors were still expecting the Reserve Bank of India (RBI) to reduce rates as well, in line with global counterparts.
The RBI said on Tuesday it stood ready to take appropriate actions to ensure functioning of financial markets and preserve financial stability.
Top private-sector lender HDFC Bank Ltd was the biggest drag on the indexes, falling as much as 1.1%.
Vedanta Ltd dropped 3.7% and was the biggest loser on the blue-chip Nifty index. The Nifty Metal Index slipped 2%.
Defense firm Hindustan Aeronautics Ltd fell as much as 5.1% to its lowest since Sept. 4 after the company said it got a notice from the International Court of Arbitration related to an alleged breach of agreement with RUAG Aerospace Services GMBH. (Reporting by Chris Thomas in Bengaluru; Editing by Maju Samuel)