BSE Sensex falls around 250 points; blue chips hit

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell more than 1 percent on Thursday, posting its biggest single-day percentage fall in nearly 1-1/2 months as profit-booking hit blue chips such as ICICI Bank for a second consecutive day, in a weak start to 2014.

Combined with Wednesday's fall, the benchmark Sensex is down 1.3 percent over the first two trading sessions of the year, after gaining 8.9 percent last year on the back of strong foreign buying.

Falls on Thursday were accentuated by weaker European and Asian shares after disappointing manufacturing data from China.

Shares have started the year with caution ahead of upcoming quarterly earnings, with analysts also keenly awaiting inflation data due mid-month that will help determine whether the Reserve Bank of India raises interest rates at the end of January.

 

Any rate hikes could further undermine confidence in economic growth. Data on Thursday showed the HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, fell to 50.7 in December from 51.3 in the previous month, reflecting softness in new domestic orders.

"Earnings would be more important from equity market's perspective as market has discounted some cooling off in inflation. We are expecting some positive surprises in Oct-Dec results," said Sudip Bandyopadhyay, managing director at Destimoney Securities Pvt Ltd.

The benchmark Sensex fell 1.19 percent, or 252.15 points, to end at 20,888.33, erasing earlier gains of as much as 0.9 percent.

The Nifty lost 1.28 percent, or 80.50 points, to end at 6,221.15, posting its lowest close since Dec 19.

Both indexes marked their biggest single day fall since Nov 21.

ICICI Bank Ltd fell 2 percent after earlier rising as much as 1.9 percent, while Axis Bank Ltd lost 1.5 percent.

Among non-banking lenders, IDFC Ltd lost 4.7 percent, erasing earlier gains of 1.5 percent, while Housing Development Finance Corp Ltd ended 0.3 percent lower.

In other blue chip shares, Larsen and Toubro Ltd fell 3 percent, while ITC Ltd ended lower 2.3 percent.

However among stocks that gained, midcap state-owned banks, including Corporation Bank Ltd , rose as dealers cited attractive valuations compared with larger private sector rivals.

Corporation Bank and Indian Bank Ltd ended up 0.5 percent each.

(Editing by Anand Basu)