MUMBAI: Indian shares ended lower on Friday, after fluctuating earlier in the session, as overall sentiment remained dented after US Federal Reserve Chair Janet Yellen signalled an interest rate hike was imminent, while investors back home were worried about the government’s move to remove high-value notes.
Financials and consumer staples led the declines, with ICICI Bank closing down 1.1 percent, State Bank of India dipped 0.6 percent, while cigarette maker ITC dropped 1.58 percent and Colgate-Palmolive India declined 1 percent.
The broader NSE index closed down 0.07 percent at 8,074.10, while the benchmark BSE index ended down 0.30 percent at 26,150.24. Both the indexes posted their fourth straight weekly losses.
The rupee fell as low as 68.15 per dollar, its weakest since June 24, compared with the previous close of 67.82. The fall came with the dollar vaulting to a 13-1/2-year high against a basket of major currencies as US bond yields rose after Yellen said the central bank could raise interest rates “relatively soon.”
Sentiment at home was also hit by the government’s move last week to remove high-value notes, disrupting daily lives of millions of Indians who live in a cash economy that is estimated to account for a fifth of the country’s $2 trillion gross domestic product.
“There is a major liquidity issue in the domestic market due to the banknotes action and the volatility in the rupee because of rising US bond yields will likely continue for some time,” said Vinod Nair, head of research at Geojit BNP Paribas Financial Securities.
“The 8,000 level for Nifty is very important, but the risk of it falling below that mark will be there as the market will continue to remain cautious for a while amid domestic and global uncertainties.”
The Nifty IT index was in positive territory after three straight sessions of falls with HCL Technologies up 1.8 percent.
A local IT sector lobby group cut its growth forecast for 2016-2017, citing local and global factors.
All the stocks of the Nifty pharma index rose with Sun Pharmaceutical Industries 2.6 percent higher and Aurobindo Pharma up 2.3 percent.
Meanwhile, the NSE Bank index was 0.32 percent lower with ICICI Bank declining as much as 1.1 percent and State Bank of India shedding up to 0.67 percent.—Reuters
