Retreating from a record, the benchmark BSE Sensex today fell for the first time in four days and closed over 167 points down on profit-booking in power and oil&gas stocks after new Prime Minister Narendra Modi assigned portfolios to his council of ministers.
After gaining nearly 419 points in previous three days to close at its highest ever level, the BSE Sensex succumbed to profit-booking in recent gainers and closed 167.37 points, or 0.68 per cent, lower at 24,549.51 after shuttling between 24,777.31 and 24,422.33 intra-day.
Shares of RIL, GAIL, SBI, HDFC, Axis Bank, ICICI Bank, Tata Motors, Maruti and M&M were among the 21 Sensex losers.
Yesterday, the 30-share benchmark index had ended at its new closing high of 24,716.88 in a highly volatile session that saw it breaching 25,000-mark for the second time ever.
Traders say investors are adopting a cautious stance this week that will see expiry of derivative contracts on Thursday.
Gains of almost 10.25 per cent in May so far have also prompted them to take some gains off the table, they added.
The 50-scrip NSE Nifty, which had lost 8.05 points yesterday, ended down 41.05 points, or 0.56 per cent, at 7318.
A narrowing current account deficit at 1.7 per cent of GDP in FY'14 from 4.7 per cent in FY'13 was apparently ignored by market participants, said equity dealers.
Selling activity was seen picking up in mid and small-cap stocks largely in line with overall trends, they added.
"Today's fall was expected by players as the formation of the new government at the Centre was already factored in", said Vinod Gupta, a Delhi-based stock broker.
Foreign institutional investors (FIIs) sold shares worth a net Rs 84.13 crore yesterday as per provisional data.
The BSE PSU index suffered the most by losing 2.41 per cent. Sectorally, Power index shed 2.14 per cent and Oil & Gas sector index lost 1.92 per cent.
Auto index fell by 1.31 per cent, Realty index ended 0.90 per cent down, Consumer durables index slipped 0.62 per cent, and Banking index lost 0.61 per cent.
Bucking the trend, shares of IT, teck and healthcare continued their upward journey.
Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities: The US and UK markets remained closed yesterday but the EU markets closed in the positive zone. Thus, the global cues were not negative. However, the Sensex ended on a weak note for the second consecutive day. Possibly, profit booking coupled with disappointment over the appointment of key ministries could have led to market decline. All indices were in red except IT, Metals and Healthcare.
Indian shares falter; investors wait for Modi to deliver
(Reuters) India's NSE index fell for a second consecutive session as investors continued to book profits in recent outperformers such as State Bank of India while they wait for actual policies from Prime Minister Narendra Modi and his new cabinet.
Arun Jaitley, who was named as India's new finance minister, committed himself on Tuesday to repairing public finances and restoring investor confidence. The close party colleague of Modi will also share the defence and corporate affairs portfolios, although only temporarily.
The new government will need to meet high investor expectations, as prospects of a victory by the Bharatiya Janata Party had sent the NSE index up by 25.8 percent to record highs since Modi was named as the prime ministerial candidate for the opposition party in mid-September.
Overseas investors have been especially strong buyers of the rally, but sold a net $14.3 million on Monday, their second session of sales in three, according to provisional exchange data.
"Market is getting into some sort of correction mode now after the election rally. Now the optimism needs to be matched with the fundamentals. I think market will start counting for the next events such as (macro) policy announcements and RBI policy," said Deven Choksey, managing director, KR Choksey Securities.
The broader NSE index closed 0.56 percent lower at 7,318 points, marking only its third daily fall this month.
The benchmark BSE index fell 0.68 percent at 24,549.51 points.
Shares in State Bank of India fell 2.7 percent, adding to their 1.9 percent fall on Monday.
Lenders, especially public sector ones, have been big beneficiaries of the recent rally given expectations they are primed to benefit from a recovering domestic economy. SBI has gained 48.85 percent so far this year.
Other outperformers also fell. Reliance Industries Ltd closed 1.25 percent lower and Bharat Heavy Electricals Ltd ended down 5.2 percent.
Mid-caps, which recently posted strong gains, also slumped. Unitech Ltd, which gained 77 percent in May, fell 6.6 percent.
Shares in Gail India Ltd fell 7.5 percent after its earnings missed some analysts' expectations. GAIL's January-March net profit rose by 57 percent to 9.72 billion rupees ($165.36 million), and Jefferies said factors including a weak demand environment and subsidy burdens impacted GAIL's earnings, according to a note to clients on Tuesday.
Shares of sugar refiners slumped as sugar futures fell to their lowest in 10 weeks on sluggish demand from bulk consumers ahead of the monsoon season.
However, investors also picked up shares that under-performed the rally, such as exporters that were seen as vulnerable to a stronger rupee
Shares in Infosys Ltd gained 1.27 percent, but were still down 1.5 percent this month, while Dr Reddy's Laboratories Ltd gained 0.5 percent, but was down 14.6 percent so far this month.
FACTORS TO WATCH
* Dollar on weaker footing as euro steadies
* Oil above $110 on Ukraine, Libya supply worries
* World shares hover near all-time high
* BSE index falls 0.68 pct; NSE index down 0.56 pct
* Recent outperforms such as Reliance, SBI fall
* FIIs sell for second session in three