 "Nifty hits fresh 21-month low ahead of Budget")
Nifty on Thursday ended at its lowest level since May 12, 2014 (21-month low), after the railway budget failed to cheer up investors. Falling for a third day, the 50-share index dropped 48 points, or 0.7 per cent, to close at 6,971. The Sensex closed at 22,976, down 113 points, or 0.5 per cent, only 24 points shy of a new 21-month low.
The decline came despite a re-bound in most global markets after three days of fall. But China's market fell six per cent and oil prices continued to remain sluggish, keeping traders nervous. Domestically, the increase in expenditure announced in the railway budget, expiry of February series derivatives contracts, and scepticism over the Union Budget on Monday, weighed on investor sentiment.
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Foreign investors pulled out nearly Rs 1,500 crore from stocks on Thursday, provisional data showed. Domestic investors provided some buying support - net buying shares worth Rs 800 crore.
Yogesh Radke, ?head of quantitative research, Edelweiss Capital, attributed Thursday's weakness to the futures-and-options expiry.
"Rollovers this time were on the upper side. But, the momentum continues to remain bearish. A positive surprise in the Union Budget will be good for the market," said Radke. "On the lower side, a level of 6,650 on the Nifty will be a key support."
Investors carried more than 68 per cent of their February contracts to the next month, versus a three-month average of 71 per cent on expiry. Union railway minister Suresh Prabhu on Thursday proposed increasing the expenditure for the world's fourth-largest network by 21 per cent to Rs 1.2 lakh crore.
He said he would focus on completing the ongoing projects rather than announcing new ones. The railway budget comes before Monday's Union Budget.
Market players said investors have turned cautious ahead of the Union Budget and will keenly watch how the government balances growth and fiscal deficit.
Economists surveyed by Bloomberg expect finance minister Arun Jaitley to meet the government's fiscal deficit target for the financial year ending March, while slightly pushing back next year's goal to 3.6 per cent of gross domestic product.
The Sensex is down 7.6 per cent in February, and is set for the worst monthly fall since November 2011. Foreign investors have pulled out around $680 million from stocks this month, extending their year-to-date selling to $2.5 billion.
Among blue-chip stocks, Tata Motors fell 2.6 per cent to its lowest level since February 11. Larsen & Toubro, engineering company, slid for a fourth day. Maruti Suzuki India, carmaker, declined 2.2 per cent and GAIL India plunged 2.8 per cent.
