Sensex slips, bullish undertone prevails

The Sensex eased 0.1 per cent, or 21.02 points, at 19,591.18 on Thursday, dropping for a third day as investors took a breather after a steep rise in March, but robust foreign fund inflows affirmed a bullish undertone.

Smallcap and midcap stocks climbed as they tried to catch up with the rally in the largecaps last month, and this helped gainers beat losers in the ratio of 1.9 to 1 in the broader market.

Energy explorer Cairn India fell 2 per cent after approval for Vedanta Resources' deal to buy majority stake in the unit of Cairn Energy for about $9.6 billion was further delayed.

On Wednesday, the government deferred a decision on the deal by referring it to a panel of ministers for further review, and Cairn Energy and Vedanta on Thursday also extended the deadline.

The 30-share BSE index saw 17 of its components losing ground. The smallcap and the midcap rose 1.25 per cent and nearly 1 per cent, respectively. Around 329 million shares were traded on the BSE, better than the 30-day daily average volume of 292 million shares.

“It is just a pause after the rally we saw,” said Rakesh Rawal, head of private wealth management at brokerage Anand Rathi. “Looking at the inflows we have had off late, the probability of a strong upside is much more than a downside.”

The benchmark BSE index had rallied 9.1 per cent in March, notching its biggest gain in six months.

Maruti Suzuki dropped 1.2 per cent after the top car maker said late on Wednesday it would recall 13,157 diesel engine cars.

Analysts said the fall in prices was a knee-jerk reaction as the recall would hardly cause any financial impact for the company that sells more than 120,000 vehicles a month.

“A small recall like this one will not have any impact on the brand image,” said Surjit Arora, research analyst at Prabhudas Lilladher.

Profit-taking pushed outsourcers lower. The sector index shed 0.7 per cent, but is up 8.2 per cent since the start of March.

Leading software firms Tata Consultancy Services and Infosys Technologies fell 2 per cent and 0.7 per cent respectively, while Wipro bucked the trend and closed 1.2 per cent higher.

The 50-share NSE index dropped 0.1 per cent to 5,885.70 points.

World stocks as measured by MSCI were down 0.1 per cent at 1021 GMT while emerging markets dropped 0.4 per cent.