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 that the central bank's move to boost lenders' liquidity may weigh on their margins.
The Reserve Bank of India had kept its policy repo rate unchanged at 7.75 per cent 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.
The 30-share BSE index Sensex ended down by 117.03 points or 0.4 per cent at 28,883.11 and the 50-share NSE index Nifty fell 32.85 points or 0.38 per cent to 8,723.70.
Among BSE sectoral indices, capital goods index fell the most by 1.88 per cent, followed by banking 1.23 per cent, power 1.14 per cent and consumer durables 1.12 per cent. On the other hand, metal index was the star-performer and was up 2.1 per cent, followed by realty 0.97 per cent, healthcare 0.93 per cent, and oil & gas 0.27 per cent.
Major Sensex gainers were Hindalco 3.89%, Tata Power 3.32%, SSLT 2.87%, Coal India 2.57% and ONGC 2.53%, while the top five losers were Axis Bank 4.64%, BHEL 4.01%, SBIN 2.32%, L&T 1.9% and Tata Motors 1.69%.
Meanwhile, 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.
Now, how about resetting Sensex base year so we can all buy stocks@ Sensex 8000 again :-P
— Aarati Krishnan (@AaratiKrishnan)
February 4, 2015Besides, foreign portfolio investors (FPIs) sold shares worth Rs 264.35 crore yesterday, as per provisional data.
The US dollar steadied on Wednesday after its worst day in more than a year, and a retreat in oil prices after four days of gains halted a rally in European stock markets.