The Nifty fell for the third session in four, led by technology outsourcing stocks such as Infosys after local media reported the United States raised the cost of employment visas, sparking worries about the outlook in a key market for the sector.
Stocks have remained under pressure through the week, with analysts citing the uncertainty behind taxation of foreign investors as a main factor, though so far they have net-sold only about $39 million worth this week as of yesterday, according to provisional data.
Traders expect volatility tomorrow ahead of the end of the 2011-12 financial year, which may lead to squaring of positions by institutional investors.
“This remains a sell on rises market, as the main trend still remains down,” said C K Narayan, who runs financial advisory firm Growth Avenues Asset Advisors.
The main 30-share Bombay Stock Exchange Sensex lost 0.4 per cent, or 63 points to 17,058.61, after hitting a two-month intraday low during the session.
The 50-share Nifty fell 0.3 per cent to 5,178.85.
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Among leading decliners, India's technology outsourcing companies fell on local media reports the United States had raised the cost of processing H-1B employment visas, which is widely used by domestic companies.
The higher costs could hit profit margins at the country's $100 billion IT sector, and raised concerns the industry could be further targeted by the United States.
Infosys lost 1.8 per cent, while Tata Consultancy Services lost 2.05 per cent.
The state-owned capital goods maker BHEL fell 1.35 per cent after minister for heavy industries & public enterprises Praful Patel advised it to explore possibilities of diversification into other sectors.
Portfolio positioning and profit-booking also hit some outperformers ahead of the end of the quarter and the financial year tomorrow.
Larsen and Toubro fell 2.1 per cent, after surging 31.5 per cent this quarter, as of yesterday's close, compared with about a 12 per cent gain in the Nifty index.
Shares of telecom stocks Bharti Airtel and Idea Cellular fell over 1.5 per cent each.
Trades attributed the falls to a media report by a financial daily, quoting a Department of Telecom official as saying it was considering a combined Rs 1,000 crore in fines for the industry for violations of 3G license conditions.