Nifty slips below 6300 as banks, industrial stocks fall

The BSE Sensex fell as much as 100 points or 0.5 per cent in early trade, while the broader Nifty slipped below the key 6,300 levels seen as a key support by traders on Wednesday. The rupee also declined 0.5 per cent to 61.38 per dollar.

Indian stocks have seen profit taking after the Sensex and Nifty hit a record high on earlier this week. Monday's rally was driven by the strong showing by the key opposition party BJP in the recently concluded state polls. The 4-0 verdict in favour of the BJP bolstered the prospects of the party and its prime minister candidate Narendra Modi in national polls due by May next year, analysts said.

However, there is a growing sense that is too early to predict a BJP victory in the national polls. (Read: 'Modi rally' in stock markets? Too early to say, warn analysts)

SV Prasad of Chime Consulting told NDTV that the next few days will be very critical in terms of how Congress reacts to the losses in the assembly polls. The big question is will the government go more populist, he said.

"I think investors should take money off the table and look at fundamentals," he added.

Market analyst Sarvendra Srivastava said the rally that took the Nifty to a record high was not backed by volumes, so there is no momentum in markets.

Recent gainers - banking and industrial stocks came under selling pressure for a second straight day. The Bank Nifty on the NSE fell 1 per cent, while the Capital Goods benchmark on the BSE fell 1.5 per cent. On the Nifty, 36 of the 50 shares retreated in early trade.

Shares in state-run Coal India fell as much as 3.4 per cent after the competition regulator imposed a fine of Rs 1770 crore on the miner. (Read the full story here)

As of 09.32 a.m., the Sensex traded 104 points lower at 21,152, while the Nifty fell 32 points to 6,301.

Global cues:

Asian share markets looked set for another indecisive session on Wednesday as investors booked profits on a range of once-crowded positions, sending the dollar and Wall Street lower, while lifting the euro, bonds and gold.

The Dow Jones industrial average lost 0.33 per cent, while the S&P 500 Index dropped 0.32 per cent.

Uncertainty about U.S. stimulus served as a convenient excuse with the jury still out on whether the Federal Reserve will start scaling back its bond buying next week.

(With inputs from Reuters)