The BSE Sensex fell on Wednesday, retreating from its record closing highs in the previous session as exporters including IT companies such as Tata Consultancy Services dropped amid concerns about the impact of a stronger rupee.
Exporters were among the top decliners in the rally in anticipation of Narendra Modi’s victory in general elections last month, as investors preferred domestic-oriented stocks that would benefit from a revival in the economy.
Investors expect some consolidation ahead of the new government’s budget, due to be unveiled by early or mid-July.
“After such a great rally, profit-booking is a must in the short term. But India is still in a sweet spot. Expect lot of triggers from the government,” said G Chokkalingam, founder of research and fund advisory company Equinomics.
The benchmark BSE Sensex fell 0.21 per cent, or 52.76 points, to end at 24,805.83, retreating from its record closing high hit on Tuesday.
The broader Nifty dropped 0.18 per cent, or 13.60 points, to end at 7,402.25, just managing to close above the psychologically important 7,400 level.
Software stocks fell on continued concerns about the stronger rupee. The local currency has gained around 4 per cent so far this year and is among the best performers among the Asian currencies tracked by Reuters.
Among top stocks, Reliance Industries fell 1.6 percent after JP Morgan downgraded the stock to “neutral” from “overweight”, saying share prices already reflect positive catalysts even as fundamentals remain on “a solid footing”.
However, among stocks that gained, fertiliser companies surged on hopes that the new government will soon clear its FY14 outstanding subsidy payments for the sector, dealers said.
Insurance companies surged on hopes that the new government may raise foreign direct investment limit in the sector to 49 per cent from 26 per cent, multiple dealers said.