The BSE Sensex fell on Wednesday, as two-wheeler makers such as Bajaj Auto retreated after an industry body cut its estimates for motorcycle sales, while software services exporters fell ahead of earnings announcement.
After a strong start to the year, investors are turning more cautious ahead of third-quarter earnings reports. Infosys Ltd will kick off the blue-chip reporting season on Friday.
Even more important will be the corporate profit outlook for the year, at a time of optimism that an expected interest rate cut by the Reserve Bank of India on January 29 will help support economic growth.
"Third-quarter earnings growth should be better than second-quarter, or else the market is likely to show signs of nervousness," said R K Gupta, managing director at Taurus Mutual Fund.
Any positive surprise cannot be ruled out, Gupta added.
The BSE Sensex fell 0.38 per cent, or 75.93 points, to end at 19,666.59. However, the index is still up 1.63 per cent for the month.
The broader Nifty ended 0.5 per cent, or 30.20 points, lower at 5,971.50.
Shares in two-wheeler makers were hit after the country's automobile industry association cut FY13 motorcycle sales growth forecast to 3-5 per cent from 5-7 per cent earlier. Bajaj Auto shares fell 1.84 per cent, while Hero MotoCorp lost 1.8 per cent.
Software services exporters also fell. The December quarter is a seasonally weak one for technology companies, and analysts are waiting for management comments on outlook. Infosys fell 0.55 per cent, while Tata Consultancy Services ended down 1.8 per cent.
