Market: Derivatives expiry sparks record volumes

The BSE Sensex fell as recent gainers such as Reliance Industries were hit by profit-booking, while IT stocks fell due to concerns about their outlooks on a day in which the expiry of derivatives led to record volumes in the futures and options (F&O) segment.

Turnover in F&O on Thursday reached around Rs 4.20 lakh crore, an all-time high, several traders said, as the number of contracts rolled over from the December contracts to the January series fell.

According to data culled from traders, the more actively traded National Stock Exchange saw around 62 per cent of contracts rolled over, marking a decrease from around 72 per cent carried over in November. The reduced rollovers lead to higher volumes as investors settle the contracts. Traders said the higher number of trade settlements was likely intended to book profits in long contracts after strong gains in domestic equities this year.

The BSE Sensex fell 0.48 per cent, or 93.66 points, to end at 19,323.80. The broader Nifty fell 0.6 per cent, or 35.50 points, to end at 5,870.10, ending below the psychological level of 5,900 points.

Caution also prevailed with only three trading sessions left in 2012, as the U.S. "fiscal cliff" negotiations continue, while the strong foreign buying that has helped sustain Indian stocks could peter out as investors close their books.

The BSE Sensex has gained around 25 per cent this year, backed by about $24 billion in foreign buying across domestic equities. Although expected interest rate cuts in January could support shares, investors also remain wary about growth, especially after the country's prime minister on Thursday called a five-year plan for average growth of 8 per cent "ambitious”.

Among decliners on Thursday, Reliance Industries Ltd fell 1.3 per cent hit by profit-taking after shares gained 4.4 per cent so this month as of Wednesday, trumping a 0.2 per cent fall in the Nifty.

Other shares that were hit by profit-taking included Mahindra & Mahindra Ltd and Hindustan Unilever Ltd.

Technology shares extended falls on caution ahead of their earnings next month and uncertainty about their 2013 outlooks.

Infosys Ltd shares fell 1.2 per cent, while Tata Consultancy Services Ltd lost 0.9 per cent.