Sensex falls on profit-taking after record high
The BSE Sensex and the Nifty retreated on Tuesday from record highs hit in the previous session as a rally sparked by the strong showing by the key opposition party in state elections faded, with investors booking profits in blue-chips such as ICICI Bank.
Results on Sunday showed the Bharatiya Janata Party (BJP) swept three out of four key state elections held since last month, delivering a blow to the ruling Congress party and bolstering the prospects of opposition prime minister candidate Narendra Modi in national polls due by May next year. (Read: Why the 'Modi rally' in stock markets may be a misnomer)
Some of the caution setting in was also tied to the industrial output and consumer inflation data due on Thursday, which will help set expectations ahead of the central bank's policy review on December 18.
Still on a positive note, foreign investors bought Indian cash shares and derivatives worth $1 billion on Monday, bringing their total for the year so far to over 1 trillion rupees.
"I think market should consolidate before it picks up once again on liquidity. A 25-basis-point rate increase by RBI is already factored in," said Paras Adenwala, managing director and principal portfolio manager at Capital Portfolio Advisors.
The Sensex fell 0.33 per cent, or 71.16 points, to end at 21,255.26, retreating from its record high of 21,483.74 made on Monday.
The Nifty fell 0.49 per cent, or 31.05 points, to end at 6,332.85, from an all-time high of 6,415.25 hit on Monday.
Both indexes snapped a three-day winning streak with other analysts uncertain about whether the rally can sustain this week.
"Indian shares can look at some consolidation as traders would digest sentiments, fundamentals, Fed tapering and RBI policy," said Brenda Kelly, analyst at IG Markets in London, late on Monday.
Shares that rallied on Monday turned into leading decliners on Tuesday. ICICI Bank fell 3.6 per cent, Larsen and Toubro lost 4.1 per cent, while Bharat Heavy Electricals ended 5 per cent lower.
Bank shares fell 1.8 per cent, retracing from their six-month high made on Monday.
Axis Bank fell 3 per cent while State Bank of India ended 2.5 per cent lower.
In addition, shares of electricity utilities dropped after the power regulator tightened certain rules for tariffs and operations for the sector in its draft 2014-19 guidelines. NTPC slumped 11.4 per cent.
Apart from NTPC, Power Grid Corp of India fell 2.9 per cent, while Tata Power Co declined 1.5 per cent.
However, among stocks that rose, Ess Dee Aluminium gained 7.3 per cent, having earlier risen as much as 9.7 per cent, after the central bank on Monday allowed the company to increase foreign investment limit on its shares.
Copyright Thomson Reuters 2013