Sensex falls 113 points; rate-sensitive stocks decline

Investors turn cautious and book profits ahead of the RBI monetary policy

The BSE Sensex fell on Monday for a fifth consecutive session to mark its lowest close in one-and-a-half weeks, as lenders and other interest rate-sensitive shares declined a day before the Reserve Bank of India (RBI)'s monetary policy review.

The RBI is expected to raise its lending rate a quarter percentage point for a second straight month to combat inflation despite the country's sputtering growth, a Reuters poll showed.

The benchmark BSE Sensex fell 0.55 per cent, 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 Nifty fell 0.71 per cent, or 43.80 points, to end at 6,101.10.

Traders said that risk aversion was also pronounced ahead of the U.S. 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 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.

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 (BOB.NS: Quote, Profile, Research) slumped 4.3 percent.

Private sector banks also fell, with HDFC Bank Ltd (HDBK.NS: Quote, Profile, Research) and ICICI Bank Ltd (ICBK.NS: Quote, Profile, Research) down 0.7 percent each.

Among real estate developers, DLF Ltd (DLF.NS: Quote, Profile, Research) fell 3.3 percent, while Unitech Ltd (UNTE.NS: Quote, Profile, Research) ended 3.2 percent lower.

Consumer goods shares fell as July-September sales volume growth was seen muted, analysts said. ITC Ltd (ITC.NS: Quote, Profile, Research) slumped 3.6 percent on Monday after its quarterly results on Friday.

The sectoral fall dragged down Hindustan Unilever Ltd (HLL.NS: Quote, Profile, Research), 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 (COLG.NS: Quote, Profile, Research) shares fell 3.8 percent after its July-September net profit fell by 24.5 percent.

Shares of Sun Pharmaceutical Industries Ltd (SUN.NS: Quote, Profile, Research) fell 1.2 percent after Bloomberg News reported the drug maker had received queries from the U.S. Food and Drug Administration over quality control at a U.S. 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 (MNFL.NS: Quote, Profile, Research) and Muthoot Finance Ltd (MUTT.NS: Quote, Profile, Research) rose 5 percent to hit their daily upper trading limit.