Sensex posts second weekly decline; flows, earnings awaited

Mumbai: The BSE Sensex fell on Wednesday, with blue chips such as ITC Ltd retreating, as traders refrained from building positions ahead of an extended holiday period, while foreign investor sales also weighed on sentiment.

Markets will be shut from Thursday until Monday for public holidays and re-open for trading on Tuesday. Investors thus opted for caution, given lingering global risk factors such as the continued civil unrest in Hong Kong and rising worries about earlier-than-expected US rate hikes.

Adding to the caution, overseas investors sold stocks worth of 4.86 billion rupees ($78.7 million) on Tuesday, offloading shares in five out of past six sessions. Foreign investors have been integral to Indian shares marking record highs on Sept. 8 and any signs of selling tends to spark concerns.

July-September earnings reports would also be key for near-term direction. Infosys Ltd kicks off the earnings season with quarterly results on Oct. 10. "In the near term, geo-political tensions, economic growth in China and eurozone will take most of the attention of the market. Quarterly results will start pouring in a couple of weeks and will impact individual stocks," said Dipen Shah, head of private client group research at Kotak Securities.

The Sensex fell 0.23 per cent, or 62.52 points, to end at 26,567.99, also falling 0.22 percent for the week. The Nifty lost 0.24 percent, or 19.25 points, to end at 7,945.55, while marking a weekly decline of 0.29 percent.

Blue-chips led the declines. ITC fell 1.7 percent, while Reliance Industries ended 2 percent lower. HDFC Bank Ltd fell 0.5 percent and IndusInd Bank Ltd lost 3.2 percent.

Non-banking financial companies (NBFCs) fell on worries the central bank may tighten norms for bad loans. The Reserve Bank of India on Tuesday said changes in the NBFC regulatory framework would be introduced by end of this month. Shriram Transport Finance Co Ltd fell 2.4 percent and Mahindra and Mahindra Financial Services Ltd ended down 0.6 percent.

Maruti Suzuki India, fell 3 percent after its exports fell by 28.2 percent in September, surprising some investors. However, two-wheeler maker Hero MotoCorp gained 1.3 percent after its September sales rose by 30 percent, beating some analysts' estimates.

Consumer discretionary shares were top gainers among BSE large-cap stocks. Traders said consumer good companies are seen as safer bets given the expected rise in disposable incomes. Berger Paints India Ltd ended up 5.5 percent, Bata India rose 5.1 percent and pizza maker Jubilant Foodworks Ltd  surged 3.9 percent.

Also, software exporters gained on hopes weakness in currencies against U.S. dollar would aid margins from overseas. Tata Consultancy Services gained 1.4 percent, while Infosys ended up 2.7 percent.