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The Sensex fell for a third consecutive session on Tuesday to its lowest close in a month, after lenders such as State Bank of India dropped on continued uncertainty over rate cuts and on caution as foreign investors sold index futures. Foreign institutional investors (FIIs) sold Rs 2,900 crore worth of index futures in the last two trading sessions, indicating they were bracing for lower levels in the near term, dealers said.
They added this raised some concerns, as FIIs were net sellers of Rs 86 crore of stocks yesterday and about Rs 500 crore on Friday, exchange and regulatory data showed.
FIIs have been a key support for markets after buying a net Rs 1,527 crore worth of shares this year as of yesterday's close.
"FIIs are mainly booking profits out of long positions built in May series, consolidation till 5,800-5,850 level is possible on the Nifty in the near term," said Amit Gupta, head of derivatives at ICICI Direct.
The benchmark BSE Sensex fell 0.33 per cent, or 64.70 points, to 19,545.78, marking its lowest close since April 30. The broader NSE Nifty dropped 0.33 per cent, or 19.85 points, to 5,919.45, falling for a third consecutive session.
The rupee's moves are also being closely watched as any further weakness is likely to trigger concerns about foreign fund outflows and raise issues about funding the current account deficit, traders said.
Global market tides have swept the rupee close to an all-time low, raising current account financing and inflation risks, but for now policymakers are more likely to use small-scale intervention and administrative measures to defend the currency. State Bank of India fell two per cent and HDFC Bank ended 0.9 per cent lower on continued concerns over rate cut in the near future.
The economy grew 4.8 per cent in the January-March quarter from a year earlier, in line with expectations and dashing hopes that a slower-than-expected growth would spark more aggressive rate cuts from the Reserve Bank of India.
Maruti Suzuki fell 1.4 per cent, marking a third day of decline after the automaker's sales declined 14.4 per cent in May compared with a year earlier. Infosys fell 0.7 per cent after a 4.3 per cent rise yesterday on bets the return of founder and former chairman N R Narayana Murthy as executive chairman would improve the company's outlook was seen as overdone.
Shares in Shriram Transport Finance Company ended flat after falling as much as 2.7 per cent after the Reserve Bank of India's clarifications on guidelines for bank licence applications were seen hurting its odds of potential approval.
