Markets judge 6-session rally as overdone, snap it

GAIL India and Power Grid Corp were the biggest decliners on the S&P BSE Sensex

Stocks, led by two-wheeler makers and utilities, declined on Tuesday, as some investors judged the benchmark index's advance to an eight-month high was overdone.

GAIL India and Power Grid Corp were the biggest decliners on the S&P BSE Sensex. NTPC, the country's biggest power producer, fell the most in two weeks. Bharti Airtel, the largest mobile-phone operator, slid for the first time in four days. Hero MotoCorp and Bajaj Auto, the largest motorcycle makers, dropped 1.6 per cent each.

The 30-share BSE Sensex declined 112 points, or 0.4 per cent, to close at 27,167. The index had risen over 881 points in the past six sessions.

The 50-share National Stock Exchange's Nifty, too, slipped from its 10-month high by settling lower by 34.7 points, or 0.4 per cent, at 8,336.

The Sensex ended its six-session gain. Asian stocks, too, dropped for the first time in a week, as safe-haven assets, including the yen and sovereign bonds, climbed.

"The decline is just consolidation and profit-booking by some investors," Paras Bothra, a Mumbai-based vice-president of equity research at Ashika Stock Broking, said by phone. "The market has shown great resilience after the Brexit vote. The mood is very positive. We're advising clients to buy at every fall."

Fading prospects of a US interest-rate increase and speculation that central banks will add to monetary stimulus in Europe and Japan helped global stocks recover the bulk of the declines that followed the UK's June 23 vote. In India, the Sensex capped its best quarter since Prime Minister Narendra Modi's election victory in May 2014, as his party eased rules on foreign direct investment, approved a new mining policy and said it would seek to pass the goods-and-services tax in the parliament session starting July 18.

The rally was aided by purchases of $771 million by global funds in June, a fourth month of net inflow, data compiled by Bloomberg show.

GAIL India plunged 2.6 per cent, the steepest drop since May 19. Power Grid tumbled the most since February 29 and NTPC declined the most since June 23.

Asset sale
Bharti Airtel lost two per cent. Hero MotoCorp fell for a second day and Bajaj Auto declined for a third day.

Jaiprakash Associates jumped 27 per cent after the builder of India's only Formula One race track announced a higher valuation for the cement business it's selling to UltraTech Cement.

A higher sale price will help Jaiprakash pare debt that more than doubled to Rs 75,300 crore ($11.2 billion) in the five years through March 2015, before falling in the last financial year, data compiled by Bloomberg show. UltraTech, the cement maker controlled by billionaire Kumar Mangalam Birla, decreased one per cent.

The Sensex has advanced four per cent this year and trades at 16.3 times projected 12-month profits, versus a five-year mean of 14.3 and a multiple of 11.9 for the MSCI Emerging Markets Index, data compiled by Bloomberg show.