MUMBAI (NewsRise) -- Indian shares pulled back from more-than-three-month highs on Thursday as investors turned their attention to elections in the southern state of Karnataka.
The BSE Sensex declined 0.2% to 35,246.27 and the Nifty 50 Index dropped 0.2% to 10,716.55. Heavyweight ITC was the biggest contributor to the losses, ending 0.9% lower. Zee Entertainment Enterprises fell 0.4%, while Asian Paints lost 0.8% ahead of their earnings due later Thursday. Oil and Natural Gas Corp. advanced 2.9% after Brent crude prices rose to fresh three-and-a-half years.
Eicher Motors, maker of Royal Enfield motorcycles, rose 1% to 30,605 rupees. CLSA reiterated its 'buy' call and 39,300 rupees target price on the stock, citing positive management commentary on demand outlook.
Elections in Karnataka are scheduled to be held on Saturday with the outcome due on Tuesday. The election pits Prime Minister Narendra Modi's Bharatiya Janata party against its biggest national rival the Indian National Congress. The outcome is closely watched to assess the extent of Modi's popularity in the run up to the national elections, which need to be held before the middle of next year.
DBS Group Research said in a note that markets will view the Karnataka poll results as a testament to Modi's popularity.
"At the start of the year, optimism was high after encouraging results from the North-East state elections, but since then the environment has turned more challenging," DBS said.
U.S. and regional leads were positive with the S&P 500 Index rising overnight to its highest in three weeks. South Korea and Hong Kong paced advance among Asian equity indexes, rising by up to 0.9%. The Nikkei Asia300 Index rose 0.3%.
Among other movers, Future Group companies advanced after its founder told The Economic Times that he will be selling a minority interest to a global retailer. Future Consumer advanced 3.9% and Future Retail climbed 4.7%.
Mukta Arts soared 10.2%, with volumes on the NSE at highest this year, after the company's film institute partnered with Reliance Jio to set up a virtual reality lab.
Welspun Enterprises jumped 10.8%, with volumes on the NSE at highest in a year, after the provider of civil engineering services reported an almost four-fold increase in net profit for the March quarter. Federal Bank tumbled 11.6% after its March quarter earnings fell short of estimates of analysts polled by Reuters.