Mumbai: Sensex, Nifty fell on Wednesday, poised for their second drop after four sessions of gains, as oil prices slumped, while investors held off from taking big bets ahead of the Union Budget next week.
Asian shares dropped as oil prices skidded after Saudi Arabia effectively ruled out production cuts by major producers anytime soon.
Oil prices, seen as a barometer of broader market sentiment, extended sharp falls from the previous session, due to an apparent lack in cooperation among members of the Organization of the Petroleum Exporting Countries (OPEC) to freeze or cut production amid global supply glut.
Investors were also jittery ahead of the rail budget on Thursday and the Union Budget due on February 29, amid hopes that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure.
“From a global stand point, emerging markets have not matched-up commensurately in terms of fundamental growth and corporate earnings”, said Dhananjay Sinha, head of research at Emkay Global Financial Services.
“As a result of that, there has been a retrenchment of flows from emerging markets in general.”
Overseas investors sold a net $41.10 million of Indian stocks on February 22, taking this year’s outflow to $2.43 billion.
Equity markets back home were also slightly volatile a day ahead of the expiry of monthly derivatives contracts.
By 1.08 p.m., the broader NSE Nifty was 0.49 per cent lower at 7,074.05 after falling as much as 1 per cent earlier in the session.
The benchmark BSE Sensex was down 0.58 per cent to 23,274.25.
Iron ore miner NMDC slumped 12 per cent as the stock turned ex-dividend on Wednesday.
Among the gainers, Indian sugar companies Shree Renuka Sugars and Balrampur Chini Mills jumped 5 per cent and 3 per cent amid hopes of export parity as global sugar prices soared.
Oil refining stocks Bharat Petroleum Corp and Hindustan Petroleum Corp gained 2 percent to 3 per cent as companies jointly negotiate oil purchase deals with OPEC producers for the first time, Indian industry and government officials familiar with the talks told Reuters.