Indian shares continued their retreat from record highs hit last week for a fourth session on Wednesday to mark their lowest close in two weeks as banks declined on concerns the central bank's move to boost lenders' liquidity may weigh on margins. The Reserve Bank of India kept its policy repo rate unchanged at 7.75 percent on Tuesday, while boosting banks' liquidity in a bid to persuade them to lower lending rates after they failed to pass on the benefits of the last official rate cut three weeks ago.
Rising bad loans at ICICI Bank, Punjab National Bank and Bank of Baroda also led to paring of positions in the sector. The NSE bank index fell 1.1 percent. The benchmark BSE index fell 0.4 percent, while the broader NSE index ended 0.38 percent lower, marking their lowest close since January 20. India's GDP and consumer price inflation data due next week are also seen as key for RBI's decision on interest rates post the budget.
"If inflation trajectory remains benign and the government sticks to its fiscal deficit targets, there is a strong chance of further rate cuts by RBI," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance. Axis Bank fell 1.2 percent, State Bank of India lost 1.5 percent, while ICICI Bank fell 0.9 percent. However, oil explorers rose after crude oil price jumped 19 percent over the past four sessions on hopes that prices may have hit a bottom after a seven-month rout slashed oil futures by nearly 60 percent and prompted major energy firms to cut spending on new production.
Cairn India rose 4.9 percent while Reliance Industries gained 0.3 percent State-run oil explorers also rose on the back of news channel CNBC TV18 report that oil ministry has proposed a new subsidy sharing proposal with the Finance Minister. Oil and Natural Gas Corp gained 2.2 percent, while Oil India rose 1.7 percent.
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