BSE Sensex edges lower on profit-taking

The Sensex fell on Friday on profit-taking, after the government expectedly won a vote for foreign investment in retailing in the Rajya Sabha, while technology stocks such as Infosys extended declines on worries over the sector’s revenue outlook.

While Parliamentary Affairs Minister Kamal Nath said victory in the Parliament vote on retail opened way for financial sector reform bills to be taken up next week, some market participants argue the reform optimism-led buying could give way to a technical correction. The Sensex rose 26.1 per cent in 2012, as of yesterday’s close, outperforming all its peers among BRIC nations. Optimism around reform measures by the government has been rewarded by foreign inflows of $20.51 billion this year. On the flip side, equities have now started looking overbought the based on technical analysis indicators, dealers say.

“Market may see some profit booking on technicals but we would be buyers on declines, as there are enough triggers for the market to perform in the form of other bills in the parliament,” said

G Chokkalingam, Chief Investment Officer, Centrum Wealth Management.

The benchmark Sensex fell 0.32 per cent, or 62.70 points, to end at 19,424.10, while gaining 0.43 per cent for the week on the government’s reform push. Sensex is trading in the ‘overbought’ territory, with its 14-day relative strength index above 70 for the sixth day.

The broader Nifty fell 0.4 per cent, or 23.50 points, to end at 5,907.40, but gaining 0.46 per cent for the week.

India’s inflation data for November and factory output data for October scheduled to be released on Wednesday are also key data points to determine the near term direction ahead of the Reserve Bank of India’s monetary policy meeting on December 18.

Infosys’ dollar revenue growth outlook of five per cent for the year ending March 2013 could be under threat, Chief Executive S D Shibulal was attributed as saying by UBS in an investor meet. Infosys closed down 0.73 per cent, Tata Consultancy Services ended 1.29 per cent lower, while HCL Technologies fell 1.8 per cent. Nomura also warned that the possibility of an organic revenue growth outlook cut by Infosys in the third quarter of current financial year remains high .

It prefers companies with current business momentum like HCL Technologies, Cognizant Technology Solutions and Tata Consultancy Services.

Indian drugmaker Claris Lifesciences Ltd fell 3.8 per cent on profit booking, after it said it will form a joint venture with Japan's Otsuka Pharmaceutical Factory and Mitsui & Co Ltd for its medical infusion drugs business in India and emerging countries.

Retail stocks ended mixed - Pantaloon Retail India rose 1.4 per cent, while Shopper's Stop fell 1.9 per cent after the Rajya Sabha approved FDI in supermarkets.

However among gainers, shares in Maruti Suzuki India rose 1.85 per cent on media reports of price hike in January.

Among other auto gainers, Tata Motors rose 0.4 per cent, while Mahindra and Mahindra ended up 1.11 per cent.

Dealers said January may see a lot of auto manufactures going for price hike after December inventory gets sold off.

Shares in Shriram Transport Finance Co rose 0.6 per cent after Morgan Stanley added the stock to its Asian banks model portfolio with five per cent weight.