The benchmark Sensex on Tuesday washed out initial gains and ended nearly 35 points down at 26,349.33 on selling in realty, IT, consumer durable shares amid investors adopting caution ahead of key state elections.
Fall in retail inflation and wholesale price rise, which hit a five-year low in September, as well as better than expected earnings from RIL initially boosted markets but losses in HDFC, Tata Motors, ITC, HDFC Bank, ONGC and TCS dragged the Sensex into the red.
Shares of realty giant DLF on Tuesday fell sharply by over 28%, wiping out Rs 7,439 crore from its market valuation, after Sebi imposed a three-year ban on the company and six top executives from securities markets.
The BSE Sensex resumed higher at 26,537.42 and moved up further to 26,550.79 on initial buying mainly in healthcare, consumer durables, banking and refinery counters. However, it declined afterwards to 26,212.01 before ending at 26,349.33, showing a loss of 34.74 points or 0.13%.
The CNX 50-share Nifty also moved down by 20.25 points, or 0.26%, to end at 7,864.00.
"Maharashtra and Haryana will go to the polls for their respective state legislative assemblies on Wednesday (15 October)...the best case in these state elections is for the BJP to get an outright majority, which will improve centre-state co-ordination and consolidate the BJP's position in the Rajya Sabha," said a Nomura report.
Retail inflation dropped to 6.46% in September on falling prices of fruits and vegetables, the lowest since India started computing Consumer Price Index (CPI) in January 2012. The September wholesale price inflation also fell to five year low of 2.38%.
The provisional data released by the stock exchanges, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 671.06 crore on Monday.
Asian shares ended mixed despite US stocks posting their third straight decline as investors awaited earnings.
Key indices in China, Hong Kong, Japan and Singapore declined by 0.24% to 2.38% while South Korea and Taiwan moved up by 0.11% to 0.65%. Both the stock exchanges, BSE and NSE will remain closed on Wednesday on the account of voting for assembly polls in Maharashtra.
European markets were trading lower in afternoon trade as data showing decline in French consumer prices in September added to worries over low inflation in the Eurozone. Key benchmark indices in France, Germany and the UK fell by 0.67% to 0.91%.
Locally, 16 scrips out of the 30-share Sensex pack ended higher while 14 others finished lower.
Major losers were Tata Motors (1.64%), HDFC (1.44%), ONGC (1.27%), ITC (0.87%), HDFC Bank (0.86%), TCS (0.76%), Wipro (0.70%), Infosys (0.63%) and Hero Motocorp (0.60%). However, BHEL rose by 3.56%, followed by Axis Bank 2.76%, Bajaj Auto 2.50%, Tata Power 1.88%, Bharti Airtel 1.72%, SBI 1.63%, HUL 1.54% and Coal India 0.97%.
Among the S&P BSE sectoral indices, Realty tumbled by 9.24%, Healthcare 0.77%, Consumer Durables 0.63% and Teck 0.50%.
The total market breadth remained negative as 1,634 stocks closed in red while 1,291 finished in green. The total turnover rose to Rs 3,226.25 crore from Rs 2,426.68 crore on Monday.
"We believe, this is a temporary phenomenon for the markets and markets would soon resume its normal course over the next 2-3 trading sessions," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.