Sensex falls for seventh day; blue chips struggle

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell for a seventh consecutive session on Monday to its lowest close in four months as blue chips such as ICICI Bank were hit by worries other allies would remove support from the ruling coalition after the DMK party's withdrawal last week.

The Nifty has now posted its longest losing streak since November 2011 and is hovering just above its 200-day moving average, even as Asian markets rallied on Monday after Cyprus clinched a last minute bailout deal.

Domestic factors continue to remain crucial for shares after the RBI last week stuck to its cautious stance on future rate cuts and key ally Dravida Munnetra Kazhagam (DMK) withdrew from the ruling coalition.

 

The twin developments raised fears about economic growth and about the government's fiscal reform agenda and are further pressuring the Nifty that is already down 4.6 percent for the year.

"The political uncertainty is hitting headlines," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors Limited.

"There is a reasonable chance that the pull and push pressure of the politics will impact the market," he added.

The Nifty fell 0.31 percent, or 17.50 points, to end at 5.633.85, touching its lowest close since November 27 and falling 4.7 percent over the past seven sessions, its longest losing streak since an eight-session fall that ended on November 21, 2011.

The BSE Sensex fell 0.29 percent, or 54.18 points, to end at 18,681.42, to its lowest close since November 26. The Sensex also posted its seventh losing session, its longest losing streak since last month.

Political concerns have been aggravated by recent media reports suggesting Samajwadi Party (SP) could also withdraw its support to the ruling coalition. Party leader Akhilesh Yadav could not immediately be reached by Reuters.

Blue chips continued to be pummelled, with ICICI Bank Ltd falling 1.5 percent, extending its decline for the month to 2.7 percent.

Bharti Airtel Ltd fell 1.9 percent on Monday, while software service exporter Wipro Ltd dropped 1 percent and Infosys Ltd lost 0.4 percent.

Among other decliners, shares in Nestle India Ltd fell 2.1 percent after the Indian unit of Nestle Group said late on Friday it would implement a staggered increase in royalty payments of 0.2 percent per year over the next five years.

Oil explorers, however, gained after Indian Oil Corp (IOC) , the country's biggest refiner, said in a statement it would raise diesel prices by about 1 percent from Saturday.

Oil India Ltd gained 4.5 percent, while Oil and Natural Gas Corporation Ltd ended 2.8 percent higher.

Infrastructure shares, including GMR Infrastructure Ltd, gained on expectations of additional foreign investment in infrastructure bonds after the government eased some of the debt investment restrictions.

GMR Infrastructure shares rose 9.5 percent and IRB Infrastructure Developers Ltd gained 1.2 percent.

(Additional reporting by Manoj Dharra; Editing by Anupama Dwivedi)