Mumbai: The BSE Sensex fell for a second consecutive day on Wednesday, retreating further from a record high, as recent outperformers such as ICICI Bank (ICBK.NS) continued to be hit by profit-taking.
Whether a recent rally that pushed the Sensex to a record high on Sunday can be sustained will depend on foreign investors who have been buyers for 22 consecutive sessions as of Tuesday.
Overseas funds have bought nearly $4 billion since the Federal Reserve delayed in mid-September a tapering of monetary stimulus, propelling most emerging share markets including India.
"Index stocks are a bit overbought so there will be some profit-booking in them and we could see some stock rotation from the index heavy weights to some mid-cap stocks," said Deven Choksey, managing director at K.R Choksey Securities.
"I think FII flows will be slightly muted in the near term as the rupee is showing some signs of depreciation and there are chances of a further fall of about 2-3 percent, so FIIs may not want to enter very aggressively at this point," he added.
The Sensex closed down 0.38 percent at 20,894.94, retreating further from a record high of 21,321.53 hit in a special trading session on Sunday.
The Nifty closed down 0.61 percent at 6,215.15.
Banking sector led the losses with the Bank Nifty falling 1.8 percent, a third consecutive daily fall after rallying for five consecutive weeks as of November 1.
ICICI Bank (ICBK.NS) shares fell 1.4 percent. State Bank of India slipped 3.54 percent ahead of its results next week which will set the tone for other state-run banks. Punjab National Bank (PNBK.NS) declined 3.92 percent while Bank of Baroda (BOB.NS) dropped 3.1 percent.
Profit-taking also hit shares in the metals space. Hindalco Industries (HALC.NS) ended down 2.1 percent, while Tata Steel (TISC.NS) fell 1.7 percent, with both stocks having risen for the last six trading sessions.
IRB Infrastructure Developers (IRBI.NS), which gained on Tuesday after Bank of America-Merrill Lynch reinitiated its coverage of the company, closed down 6.8 percent.
Bharat Heavy Electricals (BHEL.NS) closed 1.3 percent lower after the company reported a worse-than-expected 64 percent fall in quarterly net profit, the fifth straight drop.
However, the CNX-IT index gained 1.4 percent after U.S.-based Cognizant Technology Solutions Corp (CTSH.O) reported a better-than-expected 22 percent rise in revenue on Tuesday.
Infosys (INFY.NS) rose 1.23 percent, Wipro (WIPR.NS) gained 0.5 percent, while Tata Consultancy Services (TCS.NS) ended 2.4 percent higher.
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