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Benchmark shares indices ended lower, amid choppy trades, for the third straight session with IT shares declining the most led by Infosys amid reports of downgrade by global financial services major Citigroup.
The 30-share Sensex ended down 25 points at 26,247 and the 50-share Nifty closed 10 points lower at 7,843.
The Indian rupee was trading tad higher against the US dollar at Rs 61.38 compared to the previous close of Rs 61.43.
Indian economy is likely to grow by 6.4% in 2015-16 compared with 5.6% in 2014-15, the World Bank said in its bi-annual South Asia Economic Focus report.
Over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports, the report said.
Asian markets ended weak amid growth concerns in China, the world's second largest economy. Shares in Japan witnessed a sell-off dropping to a five-week low amid global growth concerns while the appreciating yen also dampened sentiment for exporters' stocks. The benchmark Nikkei ended down 1.2%. Hang Seng slipped 0.7% and Straits Times dropped 0.5%. However, China's Shanghai Composite ended up 0.8%.
European shares were trading lower amid global growth concerns after IMF cut global growth forecasts and weak industrial production data from Germany. FTSE, CAC-40 and DAX were down 0.5-0.7% each.
BSE IT and Healthcare were the top sectoral losers down 3.3-3.4% each. BSE Oil and Gas index was the top gainer up 1.7% followed by Capital Goods index, Realty, Bankex, Metal and Power among others.
IT stocks witnessed selling pressure after Citigroup in a note cited stretched valuations after gains of nearly 45% in the last two years and concerns over sharp growth slowdown of IT majors. It has downgraded Infosys stock to 'neutral' from 'buy' earlier ahead of its second quarter earnings due on Friday. The note says that shares are trading around 17x 1-year forward earnings adding that "positives are adequately discounted". Infosys ended nearly 5% down. Among other shares, TCS and Wipro were down 1.9-4% each. Tech Mahindra and MindTree also ended down 3.9-4.5% each following a downgrade to 'sell' by Citigroup.
Pharma shares witnessed profit taking after probe by US Congress. The US Congress has initiated an investigation on price hike of ten generic drugs, which includes Indian pharma majors such as Sun Pharma, Dr Reddy's and Cadila among the 14 pharmaceutical companies under scanner. Sun Pharma, Cipla and Dr Reddy's Labs ended down 2.5-4.4% each.
Shares of oil companies gained after Brent crude prices fell to 27-month low on global growth, oil glut concerns. Lower crude oil prices helpd improve margins for refiners and oil producers benefit from lower subsidy burden. Reliance Industries gained 1.1% and ONGC ended up 2.3%. PSU oil refiners such as HPCL, IOC and BPCL ended up 3.8-7% each.
Banks which are a proxy to the economy gained on the back of encouraging growth forecast for India by the World Bank. HDFC Bank, ICICI Bank and Axis Bank were up 0.7-1.3% each. SBI ended up 1.8% after a foreign brokerage upgraded the stock on the PSU banking major's strong deposite franchise, well capitalised balance sheet and focus on profitability.
Capital goods shares were among the top gainers. L&T gained 2.3% after after the company said its wholly-owned subsidiary L&T Technology Services received approval from the Competition Commission of India to acquire the engineering business of US-based Dell Product and Process Innovation Services. BHEL rebounded after its recent correction and ended up 2.1%.
Among other shares, National Buildings Construction Corporation (NBCC) ended up 2.9% after the company said it has received constructions order worth of Rs 338 crore from IIT Kanpur.
Shares of Sandesh surged 19%, extending its previous day’s rally, on back of heavy volumes in otherwise subdued market.
Shares of Punj Lloyd ended up 5% its defence related proposal was cleared by the Department of Industrial Policy and Promotion (DIPP).
Dynamatic Technologies ended nearly 10% higher, extending its previous day’s 5% rally on BSE, on reports that the company is expected to bag the biggest block of licences for manufacturing unmanned aerial vehicles (UAVs).
In the broader market, the BSE Mid-cap index ended down 0.2% and the Small-cap index ended with marginal gains.
Market breadth ended weak with 1,565 losers and 1,339 gainers on the BSE.
