Sensex snaps 4-day rise; sheds 85 pts

Asian markets closed in the red and European markets were trading lower. The FTSEurofirst 300 index of top European shares was down 0.6 per cent by 1011 GMT.

This is just a pause. Nothing has changed fundamentally. It had run up quite a bit earlier,so resistance at such levels is expected,said Rakesh Rawal,head of private wealth management at Anand Rathi Financial Services.

The 30-share BSE index closed down 0.48 per cent,or 85.41 points,at 17,615.72,with 18 of its components declining. It was the first drop in the new year for the benchmark that had risen 81 per cent in 2009. Brokerage CLSA said Sensex company earnings could rise 17 per cent year-on-year for the December quarter,but the rebound must be seen against a low base a year ago.

We see a lull in Sensex EPS upgrades until mid-2010,when pick-up in the investment cycle and global recovery should drive the next leg of upgrades and support double-digit return for the market in 2010,it said.

Infosys,India’s second-largest software services exporter, contributed the most to the day’s fall in the index as it shed 2.3 per cent to 2,525.25 rupees. The company releases quarterly results on Tuesday.

The demand outlook for IT companies is definitely improving as the global recovery is underway,but rupee appreciation is a concern. It could weigh on the stocks in the short run,said Harit Shah,research analyst with Karvy Stock Broking.

The rupee,which had risen 4.7 per cent in 2009,climbed to 15-month highs on Thursday as foreign banks sold dollars following the US unit’s broad weakness globally and particularly in the rupee non-deliverable forwards market.

Tata Consultancy Services and Wipro fell 2.6 per cent and 2.3 per cent respectively.

Top lender State Bank of India declined 0.5 per cent after gaining 7.5 per cent in the 10 previous sessions,while rival ICICI Bank dropped 1.1 per cent after climbing 2.2 per cent over three sessions.

Energy giant Reliance Industries,which has the highest weight on the Sensex,gained 1.5 per cent to 1,105.20 rupees.

Reliance has underperformed the broader market in recent times. The stock is catching up as the long-term prospects for the company are good,based on its E&P (exploration and production) business profile,Rawal said.

Auto stocks such as Tata Motors and Mahindra and Mahindra dropped 3.4 per cent and 2.1 per cent respectively,on concerns the sharp run up in 2009 could have made the stocks expensive,dealers said.

Tata Motors had soared more than five times last year and was the top gainer amongst Sensex stocks,while Mahindra and Mahindra had quadrupled.

In the broader market,gainers led losers in a ratio of 1.3:1 on volume of 582 million shares,which was lower than the average of 614 million this week.

The 50-share NSE index closed 0.4 per cent lower at 5,263.10.