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By Derek Francis
BENGALURU - Indian shares inched lower on Thursday due to concerns around growth after data showed a surprise drop in industrial output for December and a rise in January inflation to a six-year high.
The broader NSE Nifty 50 index fell 0.16% to 12,183.05 by 0401 GMT and the benchmark S&P BSE Sensex declined 0.14% to 41,506.17. Both indexes were on track to snap two days of gains.
Annual retail inflation rose to 7.59% in January, while December industrial output contracted 0.3%, after rising for the first time in three months in November.
Based on the available data, industrial output was likely to continue to record a mild contraction in January 2020 as well, said Aditi Nayar, principal economist at ICRA.
Higher inflation has also kept the country's central bank from cutting rates further, while downwardly revising India's growth forecast for the first half of the next fiscal year to 5.5%-6.0%. The earlier projection was 5.9%-6.3%.
The timing and magnitude of the next rate cut will depend on how quickly inflation appears to be reverting towards 4%, Nayar said.
Most sectors were trading flat to negative.
"The short-term trend of Nifty continues to be positive, but the weak market breadth could be a cause of some concern," said Deepak Jasani, head of retail research at HDFC Securities.
Private-sector lenders and financials were the top laggards among the sub-indexes. The Nifty private banks index was down about 0.56%, while the Nifty financials index fell 0.3%.
Among stocks, HCL Technologies was the biggest loser as it fell 1.3%.
Yes Bank , which announced a non-binding deal from "several prominent investors" on Wednesday, rose to the top of the Nifty at 3.13%
In broader Asian markets, MSCI's broadest index of Asia-Pacific shares outside Japan was trading flat. China's Hubei province reported 242 new deaths and 14,840 new cases as of Wednesday.
The news contained the rally seen by global markets over the last couple of days.
(Reporting by Derek Francis in Bengaluru; editing by Uttaresh.V)