Sensex retreats from record highs; oil cos hit by tax hike

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell on Thursday, retreating from a record high hit in the previous session as state-run oil companies such as Bharat Petroleum Corp declined after the government raised excise duty on petrol and diesel.

The government raised excise duty on petrol and diesel, by 1.50 rupees a litre each, to boost revenues and contain budget borrowing that could put off a likely cut in the retail prices of the two fuels.

Traders said the fall in retail inflation and a rebound in industrial production were on expected lines, dousing hopes of a rate cut by the Reserve Bank of India (RBI) in its policy review on Dec. 2.

Retail inflation, which the RBI tracks in setting lending rates, slowed to 5.52 percent in October, while industrial output unexpectedly grew 2.5 percent year on year in September.

"Some profit-taking is seen but general bias remains positive. I think market will next focus on RBI policy, newly appointed cabinet ministers and winter session of parliament" said Phani Sekhar, fund manager at Angel Broking.

The Sensex closed 0.24 percent down, after marking an all-time high of 28,126.48 on Wednesday.

The broader Nifty lost 0.3 percent, retreating from its record high of 8,415.05 in the previous session.

Shares of state-run oil companies lead the declines after the tax hike and earnings.

Hindustan Petroleum Corp Ltd slumped 6.3 percent, Bharat Petroleum Corp Ltd dropped 4.6 percent, while Indian Oil Corp fell 4.4 percent.

Separately, oil explorers fell, amid fears of lower realisations after Brent crude hit a four-year low below $80 a barrel.

Oil and Natural Gas Corp lost 2 percent, Reliance Industries fell 0.5 percent and Cairn India lost 3.6 percent.

Rate-sensitive stocks also fell after retail inflation and factory output came in as expected, lowering hopes of any immediate interest rate cuts by the central bank.

Housing Development Finance Corp fell 1.2 percent while ICICI Bank ended 0.9 percent lower.

Axis Bank rose 1.6 percent and State Bank of India lost 1 percent.

Tata Motors also fell 1 percent on caution ahead of its September-quarter earnings on Friday.

Among gainers, National Aluminium Co rose 3 percent after its September-quarter net profit rose 91 percent to 3.42 billion rupees.

(Editing by Anand Basu and Sunil Nair)