Indian shares closed lower on Thursday after a choppy session as bluechips such as Infosys Ltd and Tata Consultancy Services Ltd weighed on the market. The broader NSE index closed 0.39 percent lower at 8,079.95 after rising as much as 0.49 percent earlier in the day, while the benchmark BSE index fell 0.27 percent to 26,227.62.
The Nifty IT index ended 1.5 percent lower, with Infosys down 1.2 percent. Tata Consultancy Services fell 2.4 percent, while Wipro declined 1.6 percent. India announced on Thursday some new measures to ease the cash crunch caused by the move, including allowing farmers to draw money from banks against loans sanctioned to them.
The government's move to withdraw larger denomination banknotes is aimed at cracking down on rampant corruption and counterfeit currency, stoking concerns about its impact on small- and medium-sized enterprises which largely run on cash, which could have a knock-on effect on economic growth. "Overall, the general market sentiment is down as investors remain wary and we can see some discretionary spending taking place due to demonetisation," said Saurabh Jain, assistant vice-president of research at SMC Global Securities.
"A lot of mixed reaction can be expected from sector-based stocks as we get a clearer picture on who would gain from this (withdrawal of bank notes) move and who would be impacted. While gains on the indexes right now will be short term, one can expect selling to resume soon."
Engineering company Bharat Heavy Electricals Ltd rose as much as 2.9 percent after HSBC Global Research raised its rating on the stock to "buy" from "reduce". The NSE bank index rose as much as 1.15 percent after falling for two straight sessions. Axis Bank gained 1.7 percent while State Bank of India climbed 1.2 percent.
Among the losers, some auto and two-wheeler makers, which are expected to see reduced demand for their products because of the banknote measures, fell with Hero MotoCorp declining 1.4 percent. Meanwhile, HCL Technologies fell as much as 2.4 percent after rising in the last two sessions. Wipro declined as much as 2.45 percent.