Sept. 25--MUMBAI -- Indian stocks fell, led by energy companies and lenders, before the expiry of monthly derivatives contracts on Thursday.
Reliance Industries Ltd (RIL), the owner of the world's largest oil-refining complex, retreated the most in three weeks. Bharat Petroleum Corp. Ltd (BPCL) slid 3.1%, leading other state refiners lower after the government ruled an increase in diesel prices. HDFC Bank Ltd tumbled 2.8%, completing its biggest four-day decline since March 2009.
The S&P BSE Sensex decreased 0.32%, or 63.97 points, to 19,856.24 at close, after changing direction at least 10 times. Volumes were 18% below the 30-day average. The Sensex has veered between a one-year low and a 34-month high in the past month. It fell as the rupee slid to a record low in August and rallied after central bank governor Raghuram Rajan outlined plans to bolster the financial industry and shore up the rupee, and the US Federal Reserve maintained its stimulus.
"The market is expected to remain cautious ahead of the derivatives expiry, with indexes moving in a tight range in the absence of major cues to look forward to," Amar Ambani, head of research at India Infoline Ltd, said by e-mail on Wednesday.
RIL, which has the second-highest weighting in the Sensex, dropped 2.9% to Rs.849.05, the biggest fall since 3 September. BPCL and Hindustan Petroleum Corp. Ltd tumbled more than 3% after petroleum minister Veerappa Moily said there is no proposal to increase the quantum of the diesel price increase. The S&P BSE Oil and Gas index slid 1.4%, extending a three-day decline. The S&P BSE Power index rose 1.84% to be the biggest gainer among sectoral indices.
The gainers included Bharat Heavy Electricals Ltd (Bhel) that rose 7.69% to Rs.141.45 and Tata Motors Ltd which added 1.90% to Rs.342.80.
State-owned refiners sell diesel, kerosene and cooking gas below cost to curb inflation. They are partly compensated by the government and by state-run oil producers that give them discount on crude purchases. The government in January allowed refiners to increase prices of diesel, which accounts for more than 50% of all fuels consumed in the country, by half a rupee every month till the deficit on its sale is wiped out.
HDFC Bank declined 2.8% to Rs.620.6, taking the four-day drop to 9.2%. ICICI Bank Ltd decreased 1% to Rs.935.2. The 13-member S&P BSE Bankex fell 0.94% to near a three-week low. ITC Ltd lost 1.2% to Rs.344.75, the lowest level in a week. Hindustan Unilever Ltd (HUL) dropped 1.5% to Rs.633.6. The two stocks have a combined 15% weighting on the Sensex.
The CNX Nifty Index fell 0.32%, or 18.60 points, to 5,873.85. Rollovers in Nifty futures were at 47% on Tuesday, compared with 39% average of the previous three series, Edelweiss Securities Ltd said in a report. Indian derivative contracts expire on the last Thursday of the month.
Overseas funds bought a net $5 million of domestic shares on 24 September, data from the regulator showed. That extended the year's net inflow to $13.4 billion, the second-highest among 10 Asian markets tracked by Bloomberg. They withdrew $3.7 billion from local equities in the three months to 31 August as capital fled emerging markets amid prospects of the US Federal Reserve paring its record stimulus.
The Sensex has risen 2.2% this year in rupee terms and is valued at 13.8 times projected 12-month earnings, data compiled by Bloomberg show. It has lost 10.4% this year in dollar terms. The MSCI Emerging Markets Index is trading at 10.6 times, the data show. Bloomberg
Mint's Ravindra Sonavane contributed to this story.