MUMBAI: Indian shares slipped for a fifth straight session on Monday as the political situation in Karnataka clouded the outlook for general elections next year and left markets uneasy.
The chief minister of the southern state quit on Saturday, after just two days in office, as his Bhartiya Janata Party was unable to drum up the support of a majority of legislators in the state assembly.
This allows the main opposition Congress party and a regional ally to form a government in the state and is expected to galvanise opponents of Prime Minister Narendra Modi ahead of elections that must be held by May next year.
The broader NSE Nifty slipped 0.46 percent to 10,547.90 as of 0633 GMT, while the benchmark BSE Sensex was 0.4 percent lower at 34,710.59.
"We have this continuing downward momentum from last week. Secondly, Karnataka elections is weighing on the markets as the outlook of the 2019 election is looking dicey," Deepak Jasani, Head of Retail Research at HDFC Securities, said.
"Political situation till 2019 could continue to be very volatile. The clarity around a party getting majority in the 2019 election is getting a little diluted," he added.
Financial stocks such as HDFC Bank Ltd, which fell 1.1 percent, were among the biggest drags on the NSE index.
Metals stocks took a hit for a fourth session, with the Nifty metal index down as much as 1.4 percent to its lowest since April 5. Tata Steel Ltd was down 1.3 percent, while Vedanta Ltd dropped 2.1 percent.
Among the decliners, Amara Raja Batteries Ltd posted its biggest intraday percentage loss since Nov. 15, 2016 on missing analysts expectations for March-quarter results.
Meanwhile, shares in UltraTech Cement Ltd rose after its merger deal with Century Textiles and Industries.