Sensex falls to near four-month low

Mumbai: The Sensex and the Nifty fell for a third straight session to notch its lowest close since January 16, as central bank measures to bolster the rupee had a muted impact and as fears grow about sustained foreign selling.

Blue chips such as State Bank of India and Infosys extended recent declines on Thursday, despite appeasing measures from the government and the Reserve Bank of India.

The government on Monday delayed a controversial plan for taxation by a year, while on Thursday the central bank announced measures to boost dollar liquidity and ease intra-day rupee volatility.

However, both measures were not seen as enough to turn the tide in Indian markets, especially as global risk sentiment tumbles because of renewed concerns about the euro-zone.

Foreign investors have sold a net of 13.4 billion rupees over the previous three sessions, according to provisional exchange and regulatory data.

"There is a risk aversion seen in international investors as even the commodities and broader markets are falling," said Sunil Jain, Head, Equity Research at brokerage Nirmal Bang.

The Sensex fell 0.4 per cent to 16,420.05 points. The benchmark index has dropped 11.35 per cent since hitting its 2012 peak on February 22, though it's still up 6.2 per cent for the year.

The Nifty lost 0.18 per cent to 4,965.70 points.

In the short-term, global risk aversion will likely play be key in determining the markets' outlook, according to traders.

Investors will also wait for industrial output data due out on Friday and the more important inflation report due on Monday.

Lenders were among the day's decliners, even as the RBI measures, most prominently its announcement on Wednesday to further ease rule on FX deposits, were seen as benefitting the sector.

State Bank of India declined 2.12 per cent, while ICICI Bank fell 0.95 per cent.

Among other blue chips, software services exporters Infosys lost 0.93 per cent, while Reliance Industries lost 0.14 per cent.

Shares in Maruti Suzuki ended down 3 per cent after Suzuki Motor Corp, which owns a 54.2 per cent stake in the local unit, posted a lower-than-expected Q4 operating profit and gave muted guidance.

Traders also cited concerns about the competitiveness of Maruti Suzuki's petrol models after the Indian unit of main rival Hyundai Motor began offering discounts and other benefits on some its domestic models.

Rival Tata Motors fell 1.25 per cent.

Car sales in India rose an annual 3.4 per cent in April, according to data from an industry body, a sixth consecutive monthly increase, but lower than in recent months after the country hiked excise duty on the vehicles.

Among gainers, shares in Infrastructure Development Finance Company rose 3 per cent after both CLSA and Deutsche Bank upgraded the stock, citing attractive valuations among other reasons.

State-run Oil & Natural Gas shares gained 1.3 per cent after Jefferies initiated it with a 'buy' rating and a price target of 315 rupees, also citing valuations.