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The National Stock Exchange (NSE)'s benchmark Nifty fell on Tuesday, retreating from a record high hit earlier in the session, as recent outperformers such as Reliance Industries fell on profit-booking ahead of key inflation data.
The record-setting rally, with the Nifty hitting its third all-time high in as many sessions, faces a key test on Wednesday when consumer inflation and industrial output data are set to be released. The Reserve Bank of India's next policy review is scheduled for April 1.
Although foreign institutional investors on Monday bought a net $211.6 million shares in secondary markets, heavy selling in primary markets turned these into net sellers of $612 million for the day, halting a 16-day consecutive buying streak.
Still, for the year, foreign funds have bought a net $1.5 billion, which analysts have attributed largely to bets on a recovery in the domestic economy, easing inflation, and the prospect of a win by the Bharatiya Janata Party, considered more business-friendly by markets.
"Markets will be watching the data," said Jagannadham Thunuguntla, chief strategist at SMC Global Securities. "But people are building up positions and focusing their portfolios on the next big event, elections. There could be some correction, but the undercurrent is positive."
The Nifty fell 0.39 per cent to end at 6,511.90 points, retreating from a record high of 6,562.85 points hit earlier in the day.
The fall snapped a five-day winning streak in which the Nifty had surged 5.1 per cent.
The BSE Sensex fell 0.49 per cent to end at 21,826.42, also snapping a five-session winning run, although the benchmark did not set a record high on Tuesday.
Recent top gainers were among the biggest decliners. Reliance Industries fell 1.2 per cent after surging 9.7 per cent over the previous three sessions, while HDFC Bank lost 1.3 per cent after jumping 9.8 per cent over the same period.
Metal stocks extended falls to a second day on rising fears of a slowdown in China. Tata Steel fell 5.6 per cent, after losing 1.9 per cent on Monday. Hindalco Industries fell 3.7 per cent.
Meanwhile, Sesa Sterlite ended 3.34 per cent lower adding to its 1.2 per cent fall in the previous session, as iron ore prices posted their biggest one-day drop in over four years on Monday.
