Nifty edges lower after hitting record high; FIIs remain buyers

By Abhishek Vishnoi

MUMBAI (Reuters) - The Nifty edged lower on Monday after hitting a second consecutive record high as gains in blue chips such as Tata Consultancy Services were offset by a slump in resources firms following the Supreme Court's ruling on coal allocations.

The top court on Monday held as illegal all coal blocks allocated by the government to various firms between 1993 and 2009, adding that a final decision on the fate of the blocks would be taken next week.

Caution is also expected to prevail ahead of the expiry of derivatives on Thursday and gross domestic product data due on Friday. India may also post current account deficit data sometime this week.

But analysts do not expect any big retreat in shares as foreign investors remain bullish on Indian shares. Overseas funds bought shares worth 3 billion rupees ($50 million) on Friday, according to provisional data, bringing their totals for the year to $12.8 billion.

"Overall the market is stable. Coal block allocation news has created some uncertainty but continued foreign flows would negate its impact," said Deven Choksey, managing director at K R Choksey Securities.

The broader Nifty fell 0.09 percent, or 6.90 points, to 7,906.30, snapping a two-session winning streak after earlier hitting a record high of 7,968.25.

However, the benchmark Sensex gained 0.07 percent, or 17.47 points, to end at 26,437.02, enough to post its third consecutive session of gains. The index earlier hit a record high of 26,630.74.

Falls in the Nifty were led by a slump in resources firms after the top court ruling. About 200 coal blocks were awarded over the period to private steel, cement and power companies for their own consumption.

Jindal Steel and Power Ltd slumped 13.9 percent, while Hindalco Industries Ltd dropped 9.7 percent.

Tata Steel Ltd fell 4.8 percent, while Sesa Sterlite Ltd lost 4 percent.

The falls offset gains in blue chips, including a 2.4 percent gain in Tata Consultancy Services Ltd and 1.8 percent in Hindustan Unilever Ltd .

Among other stocks that gained, Maruti Suzuki India Ltd gained 1.9 percent after Credit Suisse raised its target price to 3,500 rupees from 3,020 rupees, citing optimism about its product launches and margin expansion potential.

(Reporting by Abhishek Vishnoi; Editing by Rafael Nam)