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Sensex erases early gains to close lower ahead of RBI policy meeting
Photo Credit: Reuters

Indian shares ended lower for the second consecutive session on Monday, dragged by financials amid caution ahead of the central bank's three-day interest rate-setting meeting.

The Reserve Bank of India (RBI) is expected to hold rates, according to the median forecast in a Reuters poll, while about 40 percent of the economists polled expects a hike.

“Markets opened positive due to global cues and favourable data points,” said AK Prabhakar, head of research at IDBI Capital.

The BSE index had earlier risen as much as 0.9 percent and the NSE index had climbed 0.7 percent, tracking Asian shares. MSCI’s broadest index of Asia-Pacific shares outside Japan gained as much as 1.1 percent to its highest since May 17 on strong U.S. jobs data.

Indian markets were nervous due to unfavourable market breadth and the fact that mid-cap and small-cap stocks have been underperforming over a period of time, said Prabhakar.

“In addition, more than 30 stocks have been brought under the additional surveillance measure (ASM) framework. Stocks that have done well in the last few years have cracked very badly,” he said.

BSE placed stocks such as Rain Industries Ltd and Radico Khaitan Ltd under the ASM framework effective from June 1.

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