Indian shares fell on Monday for a fifth consecutive session to mark their lowest close in nearly 1-1/2 weeks, as lenders and other interest rate-sensitive shares declined a day before the central bank's monetary policy review. The Reserve Bank of India is expected to raise its lending rate by a quarter percentage point for a second straight month to combat inflation despite the country's sputtering economic growth, a Reuters poll showed.
Traders said that risk aversion was also pronounced ahead of the US Federal Reserve policy meeting on October 29-30 and the expiry of the October derivative contracts on October 31. However, foreign investors remained net buyers for a 16th consecutive session. Provisional exchange data showed a net purchase of 6.27 billion rupees ($102 million) worth of shares on Friday, bringing the total to nearly 134.2 billion rupees during that period.
"The market felt jitters ahead of the RBI policy meeting. And a 25 bps repo rate hike is widely expected by the Street. What would be interesting is other news that RBI comes out with, in terms of fresh developments in the banking sector," said Milan Bavishi, head of research at Inventure Growth and Securities. The benchmark BSE index fell 0.55 percent, or 113.24 points, to end at 20,570.28, a fifth straight session of fall after a string of near-three year highs last week.
The broader NSE index fell 0.71 percent, or 43.80 points, to end at 6,101.10. Banking stocks fell on risk aversion ahead of the RBI's policy review, although the central bank is expected to further ease short-term interest rates. State Bank of India Ltd fell 2.7 percent, while Bank of Baroda Ltd slumped 4.3 percent. Private sector banks also fell, with HDFC Bank Ltd and ICICI Bank Ltd down 0.7 percent each. Among real estate developers, DLF Ltd fell 3.3 percent, while Unitech Ltd ended 3.2 percent lower.
Consumer goods shares fell as July-September sales volume growth was seen muted, analysts said. ITC Ltd slumped 3.6 percent on Monday after its quarterly results on Friday. The sectoral fall dragged down Hindustan Unilever Ltd, which ended 0.8 percent lower after earlier rising as much as 4.2 percent after sales volumes grew in line with expectations.
Colgate Palmolive India Ltd shares fell 3.8 percent after its July-September net profit fell by 24.5 percent. Shares of Sun Pharmaceutical Industries Ltd fell 1.2 percent after Bloomberg News reported the drug maker had received queries from the US Food and Drug Administration over quality control at a US subsidiary.
Among the gainers, Indian finance companies which provide loans against gold rallied on speculation that the central bank may allow them to lend 75 percent of the value of jewellery compared with 60 percent earlier, traders said. Shares of Manappuram Finance Ltd and Muthoot Finance Ltd rose 5 percent to hit their daily upper trading limit.
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