Indian shares edged lower on Wednesday as investors took profits in the country’s most valuable stock, Reliance Industries (RIL), after eight days of gains. Selling in the IT sector added to the losses.
The Sensex closed at 38,071, down 422 points, or 1.1 per cent. Nearly 4 per cent decline in RIL accounted for 57 per cent of the losses.
The Nifty fell 98 points, or 0.86 per cent, to end at 11,203. A day earlier, both indices had closed at their highest level since early March.
The fall in RIL comes a day after brokerages voiced concerns over its lofty valuations. Two prominent brokerages had downgraded RIL on Tuesday and said the value unlocking in businesses led to irrational exuberance. The stock has surged over 2.5 times from its March low of Rs 867 to Rs 2,200, on the back of a slew of investments in its digital services arm. Following the steep climb, RIL now has a significant weighting in both Sensex and Nifty. As a result, the fortune of the market is tied to the stock like never before.
HDFC Bank, which has the second-highest weighting in the benchmark indices, fell nearly 2 per cent and dragged the Sensex lower by 83 points.
Global markets, too, remain subdued ahead of US Federal Reserve's decision on rate cuts.
"The Indian markets continue to give mixed signs with alternate days of gain and loss. The indecision period may soon end with a lot of macro data (including US Fed decision) expected shortly," said Deepak Jasani, head of retail research. HDFC Securities.
Both domestic and foreign investors remained net sellers on Wednesday. Foreign investors sold shares worth Rs 353 crore, while domestic institutions pulled out Rs 506 crore.
Despite the benchmark indices registering losses of over 1 per cent, the market breadth remained mixed. A total of 1,339 stocks advanced and 1,358 declined on the BSE.
Nearly two-thirds of the Sensex's components ended the session with losses. As many as 10 of the 19 sectoral indices of the BSE ended Wednesday's session with losses. Energy and oil & gas stocks fell the most, and their gauges declined 3.04 per cent and 1.08 per cent, respectively.