Markets catch breath after 6-day run; indices off record highs

Indian stock market took a breather after a six-session dizzying rally, with benchmark indices Sensex and Nifty skidding from their closing peaks after emergence of sell-off in recent high-flying counters.

The investor sentiment was majorly driven by under-pressure banking stocks, which had recently seen sharp run-up in valuation, as the market was concerned over government's move to allocate higher capital to weaker banks.

Besides, a mild volatility erupted as  Thursday being the last session of January expiry in the derivatives segment and also ahead of a long weekend.

The BSE Sensex  on Thursday fell over 111 points, or 0.31%, to close at 36,050.44; and the NSE Nifty concluded the session with a loss of over 16 points, or 0.15%, at 11,069.65.

On a weekly basis, it was eighth straight week of gains for the markets. During the period, the 30-share Sensex added 538.86 points, or 1.51%; while the broader Nifty gathered 174.95 points, or 1.60%.

Anand James, Chief Market Strategist, Geojit Financial Services, said, "With the bulk of recapitalisation funds going to the banks in the PCA category, PSB heavy weights quickly let go off the recent gains, putting pressure on market sentiments. Nifty rollover which was the lowest in five months until yesterday, quickly gathered pace putting a lid on upside attempts..."

Among the Sensex constituents, SBI was in red, tumbling the most by about 5% a day after the government said it will inject Rs 88,139 crore capital in 20 public sector banks (PSBs) before March.

Other state-run lenders, Punjab National Bank and Bank of Baroda also retreated by up to 7.07%.

Overall sentiment was cautious as investors were on a wait-and-watch mode ahead of the Union Budget to be unveiled on February 1, and a long weekend as markets will remain shut tomorrow on account of Republic Day.

Investors were concerned over surging global crude prices which climbed to over three year highs to trade at $71 a barrel too negatively impacted sentiments, traders said.

The Sensex after rising to 36,247.02 points in early trade, turned negative and cracked the 36,000-mark to hit a low of 35,823.35 as participants indulged in squaring-up their positions in view of expiry amid profit-booking at record levels.

However, it recovered part of lost grounds on short- covering towards the fag-end and settled the day at 36,050.44, still down by 111.20 points, or 0.31%.

The gauge had gained 1,390.53 points in the previous six record-setting sessions and closed at an all-time high of 36,161.64 points after scaling a new peak of 36,268.19 in yesterday's session.

The Nifty too remained in the negative terrain for the better part of the session and touched a low of 11,009.20 and finally closed 16.35 points, or 0.15%, lower at 11,069.65 points. Intra-day, it hit a high of 11,095.60.

Traders also described today's fall as a technical correction as markets were in an "over-bought" position as stock valuations were stretched, spurred by encouraging quarterly earnings of some bluechip companies and unabated foreign fund inflows.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 776.42 crore, while domestic institutional investors (DIIs) sold shares worth a net Rs 193.87 crore on Wednesday, as per provisional data.

Among other laggards, Dr Reddy's too felt the heat and plunged 2.26% to Rs 2,504 after the company  on Thursday  posted a 38.51% dip in consolidated net profit at Rs 302.7 crore for the third quarter ended December 31.

Weakness in other heavyweights like Adani Ports, Hero MotoCorp, TCS, Maruti Suzuki, Bharti Airtel, Infosys, NTPC, ONGC, Power Grid, Bajaj Auto, Sun Pharma, Tata Motors, Yes Bank, Wipro, HDFC Ltd, ITC, M&M and Asian Paint also played the role.

In contrast, ICICI Bank, Coal India, Kotak Bank, Axis Bank, L&T, Tata Steel, IndusInd Bank, HDFC Bank and Hindustan Unilever topped the gainers list by surging up to 1.60% and limited the fall to some extent.

Sectorally, the BSE PSU dropped (1.79%) followed by realty (1.52%), auto (1.18%), teck (1.13%), IT index dropped 1.13%, power (1.12%), consumer durables (0.95%), healthcare (0.75%), FMCG (0.53%), Infrastructure (0.37%), oil & gas (0.35%) and bankex (0.11%).

However, metal rose 0.84% and capital goods 0.38%.

The broader markets too faced selling presure as investors locked-in gains at existing levels, pulling down the midcap index 0.75% and smallcap index 0.68%.

In other Asian markets, Shanghai Composite Index fell 0.31%, while Hong Kong's Hang Seng shed 0.92%. Japan's Nikkei too shed 1.13%.

In Europe, Germany's Frankfurt DAX was down 0.14%, while Paris 40 was up 0.24% in early trades.

London's FTSE rose 0.09%.