Indian shares snapped two-day gain and ended lower on profit taking at higher levels after gains in the previous two sessions with ITC and HDFC Bank leading the decline.
Risk appetite remained frail after assembly election results suggest Narendra Modi will be re-elected as chief minister of Gujarat for third time in a row, defeating ruling Congress party coupled with US fiscal woes.
The Bombay Stock Exchange's Sensex index fell 22 points to end at 19,453.92 while the National Stock Exchange's Nifty-50 index declined 13.20 points at 5,916.40.
BJP surged ahead of challenger Congress in Gujarat in 109 of 168 seats, with Chief Minister Narendra Modi leading from Maninagar but both state Congress chief and leader of Opposition trailing their rivals. Sources in the state election office said BJP was leading in 109 constituencies, Congress in 61, NCP one and others in four.
Global risk appetite was weak too as deteriorating federal budget negotiations in US fueled concern that automatic tax increases and spending cuts will be triggered.
Asian markets ended mixed. Hong Kong's Hang Seng was up 0.16% to 22,660, Japan's Nikkei fell 1.2% to 10,039 and China's Shanghai Composite was up by 0.3% to 2,168. In Europe, France's CAC fell 0.26% to 3,655, Germany's DAX declined 0.3% to 7,646 and UK's FTSE was flat at 5,962 in early trades.
The MSCI Asia Pacific index outside Japan declined 0.3% to 897.
On the sectoral front, top losers included real-esate, power, banks, capital goods while metals, FMCG, pharmaceuticals and IT gained on BSE.
Among the Sensex stocks, metal stocks gained with Tata Steel, Jindal Steel and Hindalco rising above 2% each while Cipla and HUL gained 1% and 1.2% . Among laggards, Mahindra & Mahindra and Bajaj Auto declined 2% and 1.4%, ITC shed 1%, Sun Pharmaceuticals fell 2%, HDFC Bank fell 0.6% and Reliance Industries dropped 0.3% on BSE.
The other key notable movers are BGR Energy Systems which surged 3% to Rs 270.80 after the company said that it has bagged orders for supply of steam turbine and generators from state owned NTPC for the proposed 2X800 MW super thermal power project at Lara in Chattisgarh. The value of the order is Rs 1,548 crore.
Reliance Power fell 2% at Rs 96 after the company said that the offer for sale (OFS) transaction was completed at a price of Rs 95 per share on a proportionate allocation method.
Opto Circuits (India) has surged 3% to Rs 109.25 after the board approved issue of warrants to promoter at Rs 145 per share.
DB Realty surged over 6% to Rs 164, its highest level since January 2011, on back of heavy volumes. As many as a combined 6.9 million shares have already changed hands on the counter so far against an average 2.5 million shares that were traded daily in past two weeks.
Punj Lloyd moved higher by over 2% at Rs 60.20 after the company said that Sembawang Engineers and Constructors, a group company has won order in Hong Kong to construct MTR Corporation's Shatin to Central Link Diamond Hill Station.
The BSE mid-cap and small-cap fell 0.2-0.4%.
The overall breadth remained negative as 1,581 stocks declined while 1,381 stocks advanced on the BSE.
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