Benchmark share indices erased all the day's gains to end marginally lower on Monday as the measures announced by the government failed to meet market expectations.
For the most part of the day, the markets traded on a firm note anticipating bold move from the government and the central bank. The Sensex fell 90 points to close at 16,882 and the 50-share Nifty shut shop at 5,115, down 31 points.
In a move to attract foreign funds, the Reserve Bank of India has the FII limit for investment in government securities by $5 billion to 20 billion.
The central bank has also allowed Sebi to register long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks, to also invest in government bonds for the entire limit of $20 billion.
Both the stock market and the rupee pared gains following the announcements as market participants were expecting bolder steps to boost the economy and the currency.
Meanwhile, European shares fell on Monday as persistent fears about Europe's debt crisis and fresh concerns about global economic growth soured investors' appetite for risk. The CAC 40, DAX and FTSE have shed 0.8-1.7% each.
Asian markets ended the day on a weak note on concerns about faltering global growth. Nikkei slipped 64 points to close at 8,734, Shanghai Composite, slipped 37 points to 2,224 and the Taiwan dropped 56 points to shut shop at 7,166 levels.
Back home, Hero MotoCorp was the top loser among the Sensex stocks. The stock slipped nearly 3% to close at Rs 2,026. Hindalco, Cipla, State Bank of India, ONGC, BHEL, TCS, Jindal Steel, HDFC Bank, Mahindra & Mahindra, Sterlite Industries and Bharti Airtel also closed lower by 1-2.3% each.
On the other hand, index heavyweight Reliance Industries ended higher by nearly 1% at Rs 717 after the company said it bought back 900,000 shares at an average price of Rs 710.32 from the open market through stock exchanges under its ongoing share buyback program on Friday, 22 June 2012. Gail India, Maruti Suzuki, HDFC, Dr Reddy's Labs and Sun Pharma were also among the notable losers.
The sectoral indices trimmed gains in the last hour of trade after the measures were announced by the government. Banking shares were the worst hit in trades today. The BSE banking index- bankex was the top sectoral loser, down 1% or 118 points to end at 11,442 levels. Power, PSU, metal, realty, IT, auto, healthcare, capital goods amd oil & gas indices also ended in the red. At the same time, consumer durables index was the only gainer.
Among the individual stocks, Sun TV Network soared 4% at Rs 292 on reports that the company has proposed to spend around Rs 200 crore as capital expenditure (capex) for the current financial year, which include upgrading equipment and on programming operations.
Schrader Duncan surged 13% to Rs 85 in noon trades after the company concluded the sale of company’s Mulund land and received the balance payment amount Rs 21.93 crores on June 22, 2012.
Natco Pharma tanked 6% to Rs 350 after the company said US District Court for the Southern District of New York has upheld the contention of Teva Pharmaceuticals that the company’s abbreviated new drug application for generic version of Copaxone infringes all the asserted claims of Teva Pharmaceuticals.
The broader markets ended on a listless note. The BSE mid-cap index slipped 2 points to close at 6,008 and the small-cap index ended higher by 15 points at 6,422.
The overall breadth was neutral as 1,421 stocks advanced while 1,332 stocks declined.