Indian shares fell for the second consecutive day on Thursday as market participants turned cautious over the possibility of an interest rate hike by the US Federal Reserve in June. An increase in interest rate is generally expected to trigger flight of capital from emerging markets such as India.
"Fed rate hike is a worry not just for India but for all emerging markets and it is this uncertainty which is turning markets more volatile," NDTV quoted Daljeet Kohli, director and head of research at IndiaNivesh Securities, as saying.
A good performance by the BJP in the recently-concluded Assembly polls that analysts saw as a fillip to Prime Minister Narendra Modi's reformist agenda failed to counter the negative sentiment.
The S&P BSE Sensex extended early morning losses to end at 25, 399.72, down 305 points, or 1.19 percent. The 50-scrip NSE Nifty fell 87 points, or 1.10 percent, to close at 7,783.
Top Sensex losers included Adani Ports, State Bank of India, Larsen & Toubro, GAIL (India), HDFC and ITC. Sensex stocks that gained included Lupin and Tata Motors.
Sun TV Network, a media company that belongs to Kalanidhi Maran — the grandnephew of DMK president M Karunanidhi — extended early morning losses to close at Rs. 370.90, down 13.25 percent. The stock was the biggest loser on the BSE after it became clear that the DMK's rival AIADMK will be forming the government in Tamil Nadu.
The Indian rupee closed at 67.37 to the US dollar on Thursday compared to previous close of 66.97, said IFA Global in a note on Thursday.
Foreign institutional investors (FIIs) were net sellers of Indian equities worth Rs. 764.58 crore on Thursday, according to provisional data released by the National Stock Exchange.
Gold prices in India closed below Rs. 30,000 per 10 gm for the third consecutive day.
On Thursday, the yellow metal closed at Rs. 29,800 per 10 gm, unchanged from its previous close. Silver prices fell Rs. 450 to close at Rs. 40,450 per kg.