Sensex continues retreat; stable rate view, mixed earnings weigh

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell nearly 1 percent on Friday after Tata Consultancy Services slumped as its quarterly profit adjusted for other income lagged expectations, sparking some profit-taking in recently outperforming software services exporters.

Software exporters accounted for most losses on the Sensex on Friday. The BSE Infotech index fell 2.6 percent while Tata Consultancy Services slumped 5.8 percent, the most in a day since October 2011.

Traders say fading December-quarter earnings optimism alongside a factored view of stable rates by the Reserve Bank of India (RBI) at its January 28 meeting after headline inflation fell to five-month lows, might induce some investors to lock in profits.

Institutional flows in cash shares as well as index futures paint a picture of indecision from overseas investors, which may also weigh on sentiment, dealers add.

"Nifty (NSE index) continues to trade in a broad range of 6,000 and 6,400. So on the higher end of the range, we would see profit-booking, and on the lower end of the range buying interest will come in," said Milan Bavishi, head of research at Inventure Growth and Securities.

The Sensex fell 0.95 percent, or 201.56 points, to end at 21,063.62, retreating for a second consecutive day from its highest level since December .

The Nifty lost 0.91 percent, or 57.25 points, to end at 6,261.65, closing below the psychologically important 6,300 level.

Both the indexes, however, notched up a weekly gain of nearly 1.5 percent, their first in three weeks, helped by a rally in rate-sensitive stocks ahead of inflation data.

Among other IT stocks, Wipro Ltd fell 3.3 percent ahead of its results later in the day, HCL Technologies Ltd fell 0.8 percent and Tech Mahindra Ltd ended 4.9 percent lower.

Mobile carriers slumped for a second day on concerns over possible high bidding prices at a spectrum auction next month after eight companies applied to bid, signalling much stronger competition than expected.

Idea Cellular Ltd fell 3.2 percent, adding to Thursday's 7.2 percent decline, while Bharti Airtel Ltd fell 1.5 percent after a 4.8 percent slump in the previous session.

Coal India shares fell 10 percent after going ex-dividend on Friday.

State-run Coal India had said on January 14 it would pay an interim dividend of 29 rupees a share, or 183.2 billion rupees, in the current fiscal year ending on March 31.

Reliance Industries Ltd fell 0.2 percent, giving up intraday gains of as much as 1.2 percent during the day on caution ahead of December-quarter earnings later in the day.

Reliance Industries may lag consensus operating profit forecast for the October-December quarter, Thomson Reuters StarMine's SmartEstimates shows.

However, among stocks that gained, Indian Oil Corp surged 6.1 percent after a panel of Indian ministers approved the sale of a 10 percent stake in the company to two state exploration firms on Thursday, with the aim of raising 48-50 billion rupees.

(Editing by Sunil Nair)