Sensex and Nifty, fell on Thursday snapping a six-session record-setting rally, as investors booked profits in IT stocks, while large state-run lenders slid as they stood to receive less money than expected from a government recapitalisation plan. Caution also prevailed ahead of the expiry of futures and options contracts. The Nifty closed down 0.15 percent at 11,069.65, but ended the week 1.61 percent higher. The benchmark Sensex ended 0.31 percent lower at 36,050.44, but gained 1.52 percent this week. Both indexes posted their fourth consecutive weekly gain. Indian share markets will be closed on Friday for a public holiday.
Bonds also fell after oil prices rallied on heavy volume, boosted by a record 10th straight weekly decline in US crude inventories.
But the rupee strengthened to 63.49 per dollar from its previous close of 63.70, tracking a rally in Asian currencies after US Treasury Secretary Steven Mnuchin welcomed a weaker dollar, calling it good for trade, in a departure from traditional US policy.
Overall sentiment was cautious as investors awaited the annual Budget for the fiscal year starting in April to be unveiled on February 1. Expiry of monthly derivative contracts at the end of the session, after indices hit record highs in each of the six previous sessions, also kept sentiment in check.
“Markets are usually volatile on the settlement date for futures and options contracts. Now, markets are waiting for the annual budget,” said R K Gupta, managing director at Taurus Asset Management.
Shares in State Bank of India and other big state-run banks fell as they stood to receive less money than investors had expected from the government’s much-awaited recapitalisation plan.
The government pledged on Wednesday to inject nearly Rs. 88,000 combined into all but one state-run lender by March in return for them implementing reforms, in a bid to boost lending and tackle a record bad debt problem.
SBI shares were the biggest drag on the broader NSE index, falling as much as 5 per cent.>