Indian shares fell for a second straight session on Wednesday as caution prevailed ahead of state elections results, including that of the crucial northern state of Uttar Pradesh, and a U.S. Federal Reserve policy meeting next week.
The election in Uttar Pradesh is the world’s largest this year and will have a key influence on Prime Minister Narendra Modi’s chances of clinching a second term in 2019.
Exit polls will be released on Thursday and results will be out on Saturday.
Meanwhile, the Federal Reserve has a policy meeting on March 14-15 and markets are expecting a rate hike after recent hawkish comments by policymakers.
“The market is in a consolidation phase and is probably already over-rated. Election results followed by the Fed meeting are important for the Indian market, after which it will take a call accordingly next week,” said R.K. Gupta, managing director at Taurus Asset Management Company.
“Whatever may be the outcome of the elections, the market is going to take a correction.”
The broader NSE index was down 0.41 percent at 8,910.75 by 0542 GMT, steadily retreating from a two-year closing high hit on Monday.
The benchmark BSE index was 0.44 percent lower at 28,872.47.
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IT stocks were among the biggest percentage losers on the NSE index, with Infosys Ltd and HCL Technologies Ltd shedding more than 1 percent each.
Kotak Mahindra Bank Ltd rose as much 2.69 percent to a record high after a block deal by an unknown buyer and a media report that Canadian pension fund Caisse de Depot et Placement du Quebec was looking to buy a stake.
Financial stocks Yes Bank Ltd and IndusInd Bank Ltd gained up to 1.83 percent and 0.75 percent, respectively, and were among the top gainers on the Nifty.