Sensex snaps 3-day winning streak

Sentiment weakens on falling trading volumes while foreign investors turn sellers

The BSE Sensex fell on Tuesday, snapping a three-day winning streak as profit-taking hit recent outperformers such as Reliance Industries and sentiment weakened due to falling trading volumes while foreign investors turned sellers.

Traders say shares are expected to remain rangebound till the new earnings season begins next week, with Infosys due to unveil its results on June 12.

The BSE Sensex is only 0.19 percentage points away from entirely erasing its gains for the year, following the Nifty which is already down 0.8 percent in 2013, as of Tuesday's close.

However, shares are seeing some support from a more stable rupee, which had tumbled to a record low last week, and due to hopes the government will soon open up more sectors for foreign investors.

"Markets may find support if there are some green shoots in the upcoming earnings season. Otherwise markets have become a function of how the rupee and global liquidity behave," said Phani Sekhar, a fund manager at Angel Broking.

The BSE Sensex fell 0.58 percent, or 113.57 points, to end at 19,463.82, retreating from a near one-month high reached on Monday.

The Nifty fell 0.7 percent, or 41.30 points, to end at 5,857.55.

Volumes on the Nifty remained weak for the second consecutive day after earlier falling to their lowest since June 19 on Monday.

Sentiment was also hit after foreign investors sold shares worth 14.7 million rupees on Monday, turning net sellers again after buying on Friday.

Reliance Industries fell 1.6 percent on profit taking, having risen 10.2 percent in three consecutive sessions of gains, after the government approved a hefty increase in gas prices.

Infosys fell 1.9 percent on continued worries about its fiscal 2014 revenue guidance after Morgan Stanley said on Monday the company may cut its fiscal 2013/14 revenue outlook to a growth of 4-6 percent, from the 6-10 percent growth it had forecast in April.

Tata Motors fell 1.2 percent after the company said in a statement on Monday that its June sales fell 18 percent to 52,708 units.

Shares in Tata Power fell 2.2 percent after ratings agency Moody's Investors Service changed its outlook to "negative" from "stable," citing "material covenant breaches on bank debt" associated with Tata Power's Gujarat-based Mundra Ultra Mega Power Project.

Among stocks that gained, Zensar Technologies rose 2.6 percent after the outsourcing services provider said it was in acquisition talks with at least two U.S.-based companies to boost its offerings in its largest export market.