The Sensex ended flat after sluggish trading on Wednesday, as mortgage lender HDFC Ltd gained on expectations a cut in its prime lending rate would lead to higher loan growth, while NTPC Ltd slipped ahead of a stake sale.
Shares touched a more than four-week low, having steadily lost ground ever since the central bank last week reduced expectations about future rate cuts with a cautious statement on future monetary policy. Earnings are also in focus, with ACC Ltd and Ambuja Cements Ltd results due tomorrow, while Mahindra & Mahindra, Sun Pharmaceutical Industries and Hindalco Industries will report earnings on Friday.
The key event remains the federal budget, to be unveiled later this month, which will provide a key test to a government that has been pushing fiscal reforms but is also facing general elections by 2014.
The BSE index fell 0.1 per cent, or 20.10 points, to end at 19,639.72, marking its lowest close since January 1.
The broader NSE index rose 0.04 per cent, or 2.30 points, to end at 5,959.20.
NTPC fell 2.35 per cent ahead of Thursday's share sale. Steel Authority of India Ltd fell 4.5 per cent on worries the government's planned stake sale will have to be at a discount to attract interest as there are concerns about the company's earnings outlook. The floor price for NTPC's share sale has been set at Rs 145, or a 4.5 per cent discount to the share's on Wednesday close. ICICI Bank Ltd shares fell 0.9 per cent, while HDFC Bank Ltd ended 0.7 per cent lower, posting their fourth fall in five sessions on continued profit taking.
Shares in HDFC Ltd rose 1.3 per cent a day after the mortgage lender cut its prime lending rate by 10 basis points starting on Wednesday, which could boost loan growth despite the hit to margins. Jubilant FoodWorks Ltd rose 9.1 per cent after Deutsche Bank upgraded its rating on the company to 'buy' from 'hold', saying the recent underperformance of shares did not properly factor in the fast food chain operator's ability to sustain "strong" earnings growth.
Shares of private sector Indian power producers gained on media reports the cabinet has given preliminary approval to price coal by averaging prices of domestic and imported coal.
Lanco Infratech Ltd shares rose 3.6 per cent, while Adani Power Ltd rose 0.35 per cent.