MUMBAI The BSE Sensex fell 1.6 percent on Monday to its lowest close this month, as jitters national elections may produce a split verdict sparked profit taking after a near 50 percent rally since early March.
Investors are worried neither the ruling Congress party coalition or the main opposition Bharatiya Janata Party-led group will win a clear majority on its own, leaving the possibility of a loose coalition of regional parties.
"The critical question for markets is will the election result in a stable government," Tushar Poddar, an analyst at Goldman Sachs, said.
The election results are due on Saturday, and exit polls after the month-long elections end on Wednesday are expected to keep trading volatile this week.
Energy giant Reliance Industries and government-run State Bank of India led the main index lower, but private-sector lenders ICICI Bank and HDFC Bank bucked the trend and rose.
The 30-share BSE index fell 1.63 percent, or 193.44 points, at 11,682.99, its lowest close since April 29 and followed a 2 percent drop on Friday.
The benchmark, which initially rose 1.3 percent, is still up 45.2 percent from its 2009 low in early March. Twenty-four of its components dropped, while in the broader market losers led gainers almost 2 to 1 on moderate volume of 409.4 million shares.
If a relatively stable coalition comes to power, shares are expected to resume their upward move as longer-term factors bode well for the Indian market.
"History suggests that as long as a stable coalition comes to power, the impact on sentiment and activity is likely to be positive," Poddar said.
Reliance Industries, which has the biggest weight in the main index, fell 2 percent to 1,859.35 rupees, while State Bank of India shed 4.9 percent to 1,260.70 rupees.
Private-sector lender ICICI Bank rose 0.6 percent to 523.45 rupees, while rival HDFC Bank edged up 0.1 percent at 1,144.80 rupees.
The 50-share NSE index fell 1.8 percent to 3,554.60 points.
MAIN TOP 3 BY VOLUME
* Unitech on 20.5 million shares
* Dish TV India on 18.4 million shares
* Ispat Industries on 12.4 million shares
STOCKS THAT MOVED
* Ashok Leyland Ltd fell 5.4 percent to 20.90 rupees after the No. 2 truck and bus maker said its April sales plummeted 69 percent from the same month a year ago.
* Hindustan Unilever shed 2.9 percent to 226.05 rupees after India's biggest consumer goods maker posted on Sunday a 3.7 percent rise in net profit for the first three months of the year, but fell short of forecasts.
* Alembic Ltd dropped 7.7 percent to 36.40 rupees after the drug maker posted a net loss of 14.7 million rupees for the quarter ended March, compared with a net profit of 153.4 million rupees last year.
(For Quotes and Interactive Charts of BSE Sensex click here)
(For more news on Reuters Money click in.reuters.com/money )
Trending On Reuters
The Supreme Court on Thursday said an Italian marine under investigation for the killing of two fishermen is free to go home while international arbitration into the case is ongoing. Full Article