U.S. Markets open in 6 hrs 38 mins

Sensex closes at lowest in a week; RIL, HDFC Bank fall

A broker monitors share prices while trading at a brokerage firm in Mumbai August 22, 2013. REUTERS/Danish Siddiqui/Files

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell on Wednesday, led by declines in blue chip shares like Reliance Industries on caution ahead of equity derivatives expiry. The Nify also ended in the red, although the index was seen taking support around its 200-day moving average for the second day.

Shares also tracked overseas markets which also dipped to a near one-week low on Wednesday as worries over a possible government shutdown in Washington and mixed signals on U.S. monetary policy kept investors in a cautious mood.

The outlook remained grim for the near term as foreign institutional investors (FIIs) were seen pausing for the time being over anxiety ahead of general elections due by May, while macroeconomic conditions remained weak, dealers said.

FIIs sold shares worth 210 million rupees on Tuesday, adding to Monday's sales of 259 million rupees.

"The near-term outlook remains grim as the period around elections is usually used by people to lighten positions," said G. Chokkalingam, managing director and chief investment officer at Centrum Wealth Management.

The benchmark BSE Sensex fell 0.32 percent, or 63.97 points, to end at 19,856.24, marking their lowest close in a week.

The broader Nifty also edged down 0.32 percent, or 18.60 points, to end at 5,873.85, after earlier falling as much as 1.38 percent, taking support around its 200-day moving average at 5,841.

Among blue chip shares, Reliance Industries Ltd (NSI:RELIANCE.NS - News) fell 2.9 percent, while cigarette maker ITC Ltd (NSI:ITC.NS - News) ended 1.2 percent lower.

Financial Technologies (India) Ltd's (NSI:FINANTECH.NS - News) shares slumped 10.5 percent after its auditor, Deloitte Haskins & Sells, said its audit of the company's fiscal 2013 results should not be relied upon.

The NSE bank index fell 0.9 percent, marking its fourth consecutive day of declines as a surprise rate hike by the Reserve Bank of India on Friday continues to weigh on lenders.

ICICI Bank Ltd (NSI:ICICIBANK.NS - News) fell 1 percent, while HDFC Bank Ltd (NSI:HDFCBANK.NS - News) ended 2.8 percent lower.

In other rate-sensitive stocks, Bajaj Auto Ltd (NSI:BAJAJ-AUTO) and Maruti Suzuki India Ltd (NSI:MARUTI.NS - News) fell 1.3 percent each.

However, State Bank of India Ltd rose 2.9 percent on unwinding of short positions in derivatives markets, dealers said.

(Editing by Anand Basu)