Mumbai: Indian shares fell for a second day in a volatile session on Friday as blue chips including ITC Ltd declined after the prime minister’s economic panel said it would be a challenge for the government to meet its fiscal deficit target in the current year.
Also, traders lightened positions ahead of the US Federal Reserve’s decision on stimulus tapering and the Reserve Bank of India (RBI) policy review next week, even as foreign investors continue to pour money in Indian shares.
Foreign institutional investors (FIIs) provisionally bought Rs.930 crore worth of Indian shares on Thursday, bringing their total to nearly Rs.6,670 crore over the previous six sessions, exchange data showed.
India’s new central bank chief Raghuram Rajan will detail his first monetary policy review on 20 September with focus squarely on whether the central bank will partly or wholly reverse its cash tightening steps or give an indication on when they might be rolled back.
Prior to that, the US Federal Reserve meets on 17 September-18 September and is expected to trim its bond buying programme. Any delay in the withdrawal of monetary stimulus will give a boost to risk assets.
“We believe that some tapering off is already priced in and to that extent, if the actual amount of tapering matches expectation, it may not be taken negatively by the markets,” said Dipen Shah, head of private client group research at Kotak Securities.
The first meeting of the RBI under the new governor will also be an important trigger for the market, especially the decision on interest rates, Shah added.
The benchmark S&P BSE Sensex fell 0.25%, or 49.12 points, to end at 19,732.76, after gaining as much as 0.6% earlier in the day. The index ended 2.4% higher for the week.
The S&P BSE Realty index was the biggest gainer, up 2.72%, while the S&P BSE Consumer Durables index lost the most, down 1.54%. The S&P BSE IT index fell 1.43%, marking its third consecutive day of declines.
The broader NSE index fell 0.10 point to end flat at 5,850.60. It made a 3% gain for the week, marking its third consecutive weekly gain.
As traders lightened positions ahead of macro events later next week, ITC fell 1.32% to Rs.331.55 .
Shares of information technology companies fell on continued profit-taking after recent outperformance and as rupee strengthened from the record low of 68.85 to the dollar hit on 28 August. Infosys Ltd lost 1.17% to Rs.3,028.25, while Wipro Ltd slumped 3.61% to Rs.455.35.
Among private sector banks, ICICI Bank Ltd fell 1.10% to Rs.940.55, while HDFC Bank Ltd ended 1.02% lower at Rs.629.20.
However, India’s state-owned banks rose on attractive valuations compared with their private sector peers, dealers said. State Bank of India gained 0.29% to Rs.1,662.95 and Bank of Baroda rose 1.9% to Rs.530.60.
Among mid-cap state-owned banks, Union Bank of India gained 4.37% to Rs.124.20, while Oriental Bank of Commerce ended 6.13% higher at Rs.172.20. Reuters
Mint’s Ravindra Sonavane contributed to this story.