Mumbai: Indian shares closed down for the second successive session on Thursday as investors continued to lock in profits following a 10.5% rally in the market this month.
Traders said weakness in the European and the US equities markets weighed on domestic investors’ sentiments, while trade across Asia was thin with Japan, China, Hong Kong and South Korea closed for a holiday.
Energy major Reliance Industries (RELI.BO), which weighs the most on the Sensex, fell 2.1 percent, as there were no immediate positive triggers in sight, dealers said.
The 30-share BSE index .BSESN dropped 0.4% to 19,861.01, with 17 of its components closing in the red and one ending flat. The index briefly rose as much as 0.3% in early trade.
“We have been expecting a correction for some time. It has come now. One should take it in stride as one did the rise,” said Gajendra Nagpal, chief executive at Unicon Financial Intermediaries.
“This is part of the consolidation process. The market will find support sooner rather than later, maybe in 10 sessions.” Domestic institutions and retail investors were taking advantage of these high levels to book profits, he added.
The benchmark index scaled 20,000 points on Tuesday, for the first time in 32 months, and had begun to show signs of fatigue in the past two sessions as investors look to book profits.
Optimism over India’s growth has seen overseas investors pouring in $4.4 billion in September alone.
“When will the foreign money stop coming in? That’s the big question,” said Ambareesh Baliga, vice president at Karvy stock Broking.
“It is like a self fulfilling prophecy -- because the money is coming in, the market is going up and because the market is going up, the money is coming in.”
Foreign fund inflows this year look on course to set a new record. Net foreign portfolio investments this year, have already hit $17.3 billion, adding to a record $17.5 billion in 2009, which had sparked an 81% rally in the benchmark.
Banking stocks, which had shown strength in the recent rally, corrected with top lenders State Bank of India and ICICI Bank closing down 0.2% and 2.3% respectively. HDFC Bank and mortgage lender Housing Development Finance lost 0.6%.
However, Oil and Natural Gas Corp rose 1.5% after the state-run explorer said it had begun shale gas exploration by drilling the first well in eastern India.
Ranbaxy Laboratories firmed 1.5% after the Mint newspaper reported the drugmaker has won a court battle to sell its copy of US-based Bristol-Myers Squibb Co’s anti-hepatitis B drug, baraclude.
In the broader market, losers outnumbered gainers by a ratio of 1.1-to-1 on volume of 463 million shares.
The 50-share NSE index .NSEI fell 0.5% to 5,959.55 points.
Elsewhere, the FTSEurofirst 300 index .FTEU3 dipped 0.7% by 5:35pm, while futures for the Dow Jones industrial average DJc1, the S&P 500 SPc1 and the Nasdaq 100 NDc1 were down between 0.5% to 0.7%.
Mahindra Satyam continued to rally and rose as much as 5.7% ahead of the firm’s audited financial results review for fiscal years 2009 and 2010 on 29 September.
But, the stock gave up gains to close 1.1% lower at Rs106.50. Parent Tech Mahindra gained 1.6% to end at Rs800.10.
Shares of PBA Infrastructure Ltd (PBAI.BO) gained over 8% after the company said it had secured a road contract worth Rs252 crore ($55 million).
Shares of KPIT Cummins Infosystems Ltd gained 7.5% after the technology firm said its board will meet on 27 September to consider acquisition of a US-based firm.