The BSE Sensex and Nifty edged lower on Wednesday as volatility in global markets raised fears of more foreign selling, although indices cut earlier losses of more than 1 per cent as state-run Life Insurance Corporation (LIC) bought shares aggressively.
LIC, a powerful market player in India that has been known to support markets at times of vulnerability, was seen buying into banks, software services and defensive stocks, traders said.
An LIC spokesman said the insurer does not comment on market speculation.
Buying by the state-run insurer helped pare earlier losses of as much as 1.3 per cent for the broader Nifty in a session marked by continued concerns that foreign investors would sell out of emerging markets due to the brewing financial crisis in Russia.
Overseas investors sold shares worth Rs 1,247 crore ($196.6 million) on Tuesday, their biggest daily net sales since October 17, and have been net sellers for six consecutive sessions, regulatory data showed.
“There was good buying after a sharp fall. We see markets are bottoming out. It should be range-bound for the time being,” said Suresh Parmar, head of institutional equities at KJMC Capital Markets.
The Nifty ended 0.47 per cent down at 8,029.80 points. The Sensex closed 0.27 per cent lower at 26,710.13 points, after having fallen 1.2 per cent earlier in the day.
Both the indices fell for a fifth consecutive session, matching a five-day losing streak in July.
Recent outperformers fell, with ITC Ltd ending down 2.3 per cent as investors booked profits. The stock had gained 8.1 per cent so far this month as of Monday compared with a 4.3 per cent fall in the Nifty.
Pharmaceutical companies slumped on concerns about the global economy, even as they stood to benefit from a weaker rupee. Sun Pharmaceutical Industries closed down 2.3 per cent, while Cipla Ltd ended 2.9 per cent lower.
However, strong buying emerged in banks, especially State Bank of India, which closed 2.1 per cent higher at Rs 301.75.
Other banking stocks also gained. ICICI Bank ended 0.5 per cent higher, while Bank of India gained 1.8 per cent.
Shares in Tata Steel ended 1 per cent higher after a government official said the company might be allowed to resume production from its biggest iron ore mine this month.