Mumbai: The BSE Sensex snapped a 3-session winning streak and eased on Tuesday in choppy trade as resistance emerged after the market had rallied nearly 14% over five weeks, but sustained foreign interest kept the undertone firm.
Traders said there was profit-taking as the 14-day relative strength index of the top-30 share BSE benchmark hovered near 80, well above 70 and indicating the market was overbought.
”It is better to be careful than be greedy at this point in time,” said Neeraj Dewan, director of Quantum Securities. ”The market looks overbought at current levels and valuations do catch up at some point.”
The BSE index ended down 0.33%, or 68.02 points, at 20,407.71, after swinging between positive and negative territories through the day. Eighteen of its components fell.
The benchmark, which is about 800 points from a record high, has risen nearly 17% this year, boosted by foreign portfolio investments of $19.7 billion.
More than a third of the inflow has come since the start of September, and there is little sign of the demand easing.
Atul Singh, who heads the Indian wealth management arm of Merrill Lynch, said risk appetite was improving and investors were now more comfortable as the country’s economic growth picks up and its stock markets surge.
”There was a little bit more momentum in the last 15 months but I don’t think that momentum is temporary and will go away,” he told the Reuters Global Wealth Management Summit.
Deven Choksey, managing director and CEO of KR Choksey Shares, said he expected the market to scale a record high by the middle of next month.
Financials dropped as traders booked profits after hawkish comments on inflation by a central bank deputy governor.
Top lender State Bank of India edged 0.2% lower while rivals ICICI Bank and HDFC Bank shed 0.9% and 1.8% respectively. Mortgage lender Housing Development Finance Corp dropped 2.4%.
Automakers continued to step on the gas on expectations for robust demand in the festive season that stretches from September to December.
Top carmaker Maruti Suzuki and leading utility vehicle maker Mahindra & Mahindra gained 1.5% and 2.3% respectively.
Tata Motors bucked the trend and dropped 0.5% after it raised $750 million in an institutional share sale.
Energy giant Reliance Industries, which has lagged the broader market this year as delay in ramp up of gas production weighed, rose 0.5%.
The stock, which has the highest weight on the Sensex, was still down 6.1 percent since the start of the year.
In the broader market, gainers outpaced losers in a ratio of 1.3:1 on heavy volume of 659 million shares.
The 50-share NSE index dropped 0.2% to 6,145.80.
Elsewhere, MSCI world equity index was up 0.3% by 3:49pm, while the more volatile emerging markets index dropped 0.2%.
Microsec Financial Services fizzled out after listing at a 17% premium to issue price of Rs118 per share. The stock closed at Rs110.90,
United Spirits, the world’s second-largest spirits maker by volume, dropped 2.4% to Rs1,628.90, after Citigroup Global Markets downgraded the stock to ”hold” from “buy” on Monday.