Reliance Industries, ITC Drag Down Indian Stocks

Indian shares declined on Monday, dragged by index heavyweights Reliance Industries after its quarterly earnings and ITC on demerger update.

The Nifty 50 index slipped 0.37 per cent to 19,672.35, while the S&P BSE Sensex closed 0.45 per cent lower to 66,384.78.

Nine of the 13 major sectoral indexes logged losses, with the fast-moving consumer goods index sliding 1.72 per cent. ITC fell 3.89 per cent and led the losses in FMCG and Nifty 50 indexes after approving the demerger of its hotels business.

"We believe the markets could correct another 4 per cent in the very short term," said G Chokkalingam, managing director for research at Equinomics Research.

"Such a correction would be good for the markets after the recent rally from an overall valuation and liquidity point of view."

The Nifty 50 has risen for five months in a row since March, adding 13.69 per cent over the period and scaling fresh record highs before witnessing a slide over the last two sessions.

Reliance fell 2.02 per cent after posting a bigger-than-expected drop in quarterly profit on weakness in its flagship oil-to-chemicals (O2C) business.

"After the recent run-up in Reliance Industries ahead of the Jio Financial Services demerger, the near-term upside is limited," said Anil Sharma and Aditya Bansal, analysts at Kotak Institutional Equities.

Reliance rose 9.57 per cent between 8 July, when it announced the record date for the demerger of its financial services business, and 20 July, the day when the demerger became effective. The stock has fallen 5.05 per cent over the last two sessions.

Private lender Kotak Mahindra Bank lost 3.7 per cent despite reporting a larger-than-expected rise in June-quarter profit. The stock had gained over 3.5 per cent in the last three sessions.

Asian and European equities were also subdued ahead of the US Federal Reserve and European Central Bank monetary policy meetings, due later this week.