Brushing aside rate cut hopes fuelled by soft inflation and IIP data, the benchmark BSE Sensex on Thursday fell by 45 points to 27,206.06 on profit-booking in export-oriented stocks such as Infosys and TCS after rupee staged a comeback against the dollar.
Sentiment continued to remain bearish on concerns over muted Q4 earnings, delay in key reform bills in Parliament and forecast of a subdued monsoon, brokers said.
At the forex market, rupee surged more than 35 paise against the dollar (intra-session). Meanwhile, A data showed Wholesale Price Index (WPI) inflation declined to a new low of (-) 2.65% in April.
With inflation dropping to a new low in April, India Inc has reaffirmed demand for a rate cut, saying it provides ample space for the RBI to slash the key policy rate.
As a result, investors went on a buying spree, leading to a rise in the broader market. The BSE mid-cap and small-cap indices closed up around 0.89 and 0.92%, respectively.
The 30-share BSE index slipped below the 27,000-mark in early trade to hit a session low of 26,948.62 as heavy-weights succumbed on profit-booking after Wednesday's gains.
On gains in Hindalco, SBI, Bajaj Auto and Tata Steel stocks trimmed most of losses and the index settled with a fall of 45.04 points or 0.17% at 27,206.06.
The NSE Nifty too edged lower by 11.25 points or 0.14% to end at 8,224.20. Intra-day, it cracked the 8,200-mark to touch a low of 8,137.30.
"Volatility continued on the fourth consecutive day in a row and key benchmark indices closed with small losses. Market trimmed losses in late trade after languishing in negative zone almost throughout the trading session," said Jayant Manglik, president-retail distribution at Religare Securities.
Selling was mostly observed in IT, consumer durables, teck, capital goods and healthcare shares, while realty, oil&gas, auto, metal and power counters were in demand.
Brokers said profit-booking in stocks that recorded gains in Wednesday's trade and a mixed trend in other Asian markets tracking dampened mood here.
Asian stocks ended mixed as key indices in China, Hong Kong, Singapore and South Korea firmed up by 0.06 to 0.29%, while those in Japan and Taiwan moved down between 0.98 and 1.16%.
European stock markets were also trading narrowly mixed as indices in France and Germany moved up by 0.03% and 0.10%, while UK's FTSE was quoting down by 0.09%. "...indices started the day on a weak note and slipped down further over 1% as investors curbed their positions as concern over tax issue related to FIIs remained unsolved," said Jignesh Chaudhary, head of Research at Veracity Broking Services.
Out of 30 Sensex stocks, 18 ended in the positive zone. Major losers were Vedanta at 1.65%, followed by Sun Pharma 1.12%, Infosys 1.09%, Wipro 1.04%, HDFC 0.92% and TCS 0.79%.
However, Hindalco rose by 2.92%, followed by SBI 2.37%, Bajaj Auto 1.87%, M&M 1.71%, Tata Steel 1.70%, ONGC 1.44%, Maruti 1.21%, Cipla 1.14% and Hero MotoCorp 1.11%.
Among the BSE sectoral indices, IT fell by 0.71% followed by teck 0.34% and consumer durables 0.41%.
However, realty rose by 1.07%, followed by oil&gas 1.02%, auto 0.85% and power 0.69%. Total market breadth remained positive as 1,474 stocks ended higher, while 1,220 stocks finished lower with 112 ruling steady. The total turnover fell to Rs 2,965.41 crore from Rs 3,545.28 crore on Wednesday.