Indian shares slid to a two-week closing low on Thursday, as worries the government would move to rein in firm cement and steel prices ahead of national elections combined with poor retail investor appetite to depress sentiment.
The top 30-issue Mumbai Stock Exchange index fell 1.9 percent to 5,649.86 points, with losses over the past three sessions mounting to 5.1 percent.
"There is selling pressure and no compulsion to buy, as there are negatives in many sectors like steel, cement and technology," said Navin Roy, a dealer at TAIB Securities.
"The index will fall further, and seek to consolidate at the 5,550-5,560 level. If there is no support there, then we will have to change our short-term outlook on the market," he added.
Traders said a slew of recent equity issues led by some big ticket government stake sales have sated retail investors' appetites.
Commodity stocks led the fall.
Shares of top cement producer Associated Cement Companies fell three percent and those of No. 4 producer, Gujarat Ambuja, slid 4.6 percent.
Steel Authority of India, the state-run No 1 steel maker, fell more than two percent, while shares of Tata Iron and Steel, the second-largest, slid nearly four percent.
But a positive response to the initial public offering of bio-technology firm Biocon Ltd, which was subscribed more than five times on the opening day of bids, on Thursday, helped lift select pharmaceutical stocks.
Generic drug maker and India's only New York-listed pharma firm, Dr Reddy's Laboratories climbed nearly 1.7 percent to 1,065.40 rupees, and Wockhardt Ltd, which also has some biotech products in its portfolio, rose 0.7 percent to 825.35 rupees.
Bond yields continued to drift down for the ninth straight session, propped up by ample cash and hopes that the inflation rate would ease. The benchmark 10-year federal bond edged down to 5.2104 percent, from Wednesday's 5.2143 percent.
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