INDIA STOCKS-Indian shares snap losing streak as key Adani stocks cap losses

(Updates closing levels)

BENGALURU, Jan 30 (Reuters) - Indian shares struggled for direction in a volatile session on Monday, ahead of the Union budget, as select Adani stocks arrested the slide after a short-seller attack on group companies triggered a sell-off over the previous two sessions

The Nifty 50 index closed 0.25% higher at 17,648.95, while the S&P BSE Sensex rose 0.29% to 59,500.41. Both the indexes swung between 0.6% gains and 1.1% losses during the session before settling a notch higher.

The move in the benchmarks tracked the intraday trajectory of high-weightage financials, which rose 0.33% at the close. Financials had dragged the index over the previous two sessions.

Indian equities had tumbled to a three-month low on Friday, dragged by a short-seller attack on Adani group companies, which triggered a selloff in banks.

The group faced a critical session today with the secondary share sale of the flagship Adani Enterprises seeing only 2% subscription as of 3:33 p.m. IST on Monday.

"The markets will remain very volatile ahead of the budget," Aishvarya Dadheech, director and fund manager at Ambit Asset Management said. The India volatility index rose more than 2% to 17.71 on Monday, marking a three-month high.

Analysts also flagged fears of a drawdown in financials on the back of a scathing report by Hindenburg Research that raised concerns about the books of Adani companies.

Adani Enterprises rose as much as 10% before paring gains to settle 4.76% higher while Adani Ports closed little changed. ACC and Ambuja Cements also advanced over 1% while the other group stocks corrected for the third consecutive session.

Twenty-nine of the Nifty 50 constituents advanced while 21 declined. Among individual stocks, Bajaj Finance rose over 4.5% after its third-quarter earnings beat estimates, while Sun Pharma hovered near an eight-year high ahead of third-quarter results.

Foreign institutional investors sold 83.72 billion rupees ($1.03 billion) worth of shares over the last two sessions since Hindenburg's report.

Investors will shift focus to India's Union budget on Feb. 1, with the government's fiscal consolidation path and borrowing calendar for the financial year 2024 as triggers.

Besides the Union budget, analysts also said rate decisions by global central banks and January automobile sales data would determine the mood in the market.

The U.S. Federal Reserve, European Central Bank and the Bank of England are scheduled to announce their rate decisions, later this week.

($1 = 81.6450 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil)