Sensex falls on profit taking, Nifty below 6300

The BSE Sensex traded lower on Wednesday, while the broader Nifty stayed below the key 6,300 levels seen as a key support by traders. The rupee at its day low hit 61.42 per dollar.

Markets opened lower, but the day's low at 21,088 on the Sensex was made after noon when Standard & Poor's said India's sovereign rating may come under pressure if general elections due by May next year end up with a hung parliament or with a government unable to push through reforms.

As of 2.02 p.m., the Sensex traded 128 points lower at 21,127, while the Nifty was down 35 points to 6,297.

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.

There is also worry ahead of consumer inflation data due on Thursday and central bank's monetary policy review on December 18.

Recent gainers - banking and industrial stocks came under selling pressure for a second straight day. The Bank Nifty on the NSE fell over 1 per cent, while the Capital Goods benchmark on the BSE traded 1.4 per cent lower. On the Nifty, 38 of the 50 shares retreated in early trade.

Global cues:

Asian share markets retreated 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)