Sensex, Nifty retreat from record highs on FII sales

The BSE Sensex and Nifty fell on Wednesday, retreating from record highs hit earlier in the session as investors pared positions in blue-chips such as Tata Motors after foreign investors marked their first sale of cash shares in three weeks.

Foreign institutional investors sold Indian shares worth Rs 102 crore ($16.5 million) on Tuesday, marking their first sale since October 28. Overseas investors have been key drivers of the stock market rally this year, buying a net $15.47 billion worth of shares so far in 2014, according to regulatory data.

But caution is now beginning to set in ahead of the winter session of the parliament scheduled to begin next week, when Prime Minister Narendra Modi's government is expected to push a slew of reforms including goods and services tax.

Investors are also looking forward to the Reserve Bank of India's policy review on December 2, while also tracking global factors, including minutes of the US Fed's policy meeting due later this week. "FIIs are making good profit on Indian shares after a long time, so expect 3-5 per cent correction by December-end due to profit taking," said G Chokkalingam, founder of Equinomics, a research and fund advisory firm.

The BSE Sensex fell 0.46 percent after hitting an all-time high of 28,294.01 earlier in the day. The Nifty settled down 0.52 per cent after rising to a record high of 8,455.65. Blue-chips led falls amid profit-taking. The 50-share Nifty has gained 35.2 per cent so far this year, making India the best performing equity market in Asia during the period. Tata Motors fell 2.2 per cent, while Sun Pharma ended lower 1.9 per cent. ITC lost 0.7 per cent, while Tata Steel ended 3.2 per cent lower.

State bank of India lost 1.2 per cent after rising 8.3 per cent in the previous three sessions.

Reliance Industries fell 1.1 per cent, Oil and Natural Gas Corp lost 1.7 per cent, and Cairn India declined 2.7 per cent.

Among gainers, consumer goods stocks rose on hopes falling inflation would lift spending, while lower raw material costs would aid margins.

Hindustan Unilever rose 1.1 per cent and Britannia Industries advanced 2.1 per cent. New entrants on the MSCI India index rose ahead of rejig effective from the close of November 25. Zee Entertainment gained 1.4 per cent, while Motherson Sumi Systems ended up 0.1 per cent.