The share markets fell on Monday, with the BSE Sensex falling as much as 173 points. The markets were dragged by energy stocks such as Indian Oil Corp Ltd (IOC) and Bharat Petroleum Corp Ltd (BPCL) which declined on reports the refiners may buy stakes in GAIL (India) Ltd.
IOC and BPCL may buy 26 per cent each in gas utility GAIL, the Economic Times reported citing the Press Trust of India, adding that the companies would pay the government over Rs. 20,000 crore ($3.08 billion) each to become integrated energy firms.
Analyst say the deal will have negative implications for BPCL and IOC as it will saddle them with more debt in addition to what they already carry on their balance sheets.
Shares in both IOC and BPCL dropped over 4 per cent each, with IOC hitting its lowest since January 2017.
At 12:40 pm, the BSE benchmark index Sensex was down 159 points at 33,016 while the NSE Nifty was down 66 points at 10,128.
“The likelihood of a very strong rebound from the recent correction looks unlikely,” said Dhananjay Sinha, head of research, economy and strategy at Emkay Global Financial Services.
“There are two factors relevant now that will impact retail flows – country’s political landscape and how it pans into policymaking and market sentiment, and secondly, the aspect of tightening of liquidity and rising yields,” Mr Sinha said.
Metal stocks took a beating with the Nifty metal index dropping 2.8 per cent for a fourth consecutive session of losses.
Chinese iron ore fell 4 per cent to its lowest since November as high inventory levels and a weak domestic steel market weighed on prices.
Steel Authority of India Ltd shed 6.7 per cent, while Tata Steel Ltd lost 3.1 per cent.
Financial and IT shares also declined with ICICI Bank Ltd and Infosys Ltd shedding over 1 per cent each.
Meanwhile, Asian shares were weak as investors stayed cautious in a week when the Federal Reserve is likely to hike US interest rates and perhaps signal that as many as three more lie in store for the rest of the year.