Indian shares snap four-day rally

Indian shares snapped four straight sessions of gains to close lower on Thursday, with lenders such as ICICI Bank leading the decline amid growing worries about the impact of demonetisation on economic growth. The broader NSE index ended down 0.38 percent at 8,192.90, while the benchmark BSE index closed 0.35 percent lower at 26,559.92. Data on Thursday showed Indian factory activity decelerated sharply last month as demonetisation led to a rationing of cash and cooled domestic consumption, new orders and production.
Investors largely ignored data released late on Wednesday that showed gross domestic product expanded by an annual 7.3 percent between July and September, given most analysts expect that to reverse this quarter after India withdrew higher-value banknotes. Data on Thursday showed Indian factory activity decelerated sharply last month as demonetisation led to a rationing of cash and cooled domestic consumption, new orders and production.
Analysts said markets would likely remain flat over the next few sessions as investors await the Reserve Bank of India's policy decision on Wednesday, amid growing expectations that the central bank will cut rates to help offset the economic impact of demonetisation.
"Markets will remain lacklustre for the next few sessions until we get some clarity from the RBI policy meet next week," said Jayant Manglik, president, retail distribution, Religare Securities. Oil producers rose as crude prices shot up 13 percent, smashing trading volume records, after Opec and Russia cut a deal to reduce output to drain a global supply glut. ONGC rose as much as 3.4 percent, Oil India Ltd climbed up to 3.8 percent and Cairn India Ltd gained as much as 2.3 percent.
However, banks fell on profit-taking after the sector rallied on Wednesday when the central bank allowed lenders to use all their cash to meet cash reserve ratio requirements, not just a certain amount of the money. ICICI Bank fell as much as 2.4 percent after rising 4 percent on Wednesday.