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The Nifty fell on Tuesday, retreating from a record high earlier in the session as financial firms slumped on worries that Parliament would delay an insurance Bill, while new rules for offshore derivatives raised worries over foreign flows.
ITC contributed the most to the index's fall, slumping 5.2 per cent, the most in a day since June 23, after the health ministry accepted the recommendation of an internal panel to ban the sale of cigarettes sold loose or outside of packs.
Traders are bracing for more volatility in sessions ahead of the release Friday of economic growth data for July-September and the Reserve Bank of India's policy review on December 2, amid rising pressure on the central bank to cut interest rates.
The country's economic growth probably slowed to around five per cent in the three months to September, slipping from 5.7 per cent in the previous quarter, two senior finance ministry sources said.
"Opposition (parties) not cooperating on reforms is worrying the market," said Samir Arora, founder and fund manager at Helios Capital from Singapore. Arora added markets were hoping "time is not wasted on theatrics," referring to political debates in Parliament.
The Nifty ended down 67.05 points, or 0.8 per cent, at 8,463.10 after hitting a record high of 8,535.35 earlier in the session. The benchmark Sensex fell 161.49 points, or 0.6 per cent, to 28,338.05 after marking its all-time high of 28,541.96 on Monday.
Both the indexes marked their biggest daily fall since October 16. The declines came following media reports of opposition within Parliament to a legislation proposal to allow more foreign investment in the insurance sector.
Among the financial firms that fell, Max India lost 4.8 per cent, while Reliance Capital slumped 4.6 per cent. Among lenders, ICICI Bank lost two per cent, while Kotak Mahindra Bank lost 3.3 per cent. State Bank of India fell 1.4 per cent, while Axis Bank lost 1.6 per cent.
Meanwhile, the market regulator Securities and Exchange Board of India on Monday said it was revising rules for offshore derivative instruments to bring them in line with new foreign investment norms approved earlier this year, raising worries about flows from abroad.
Blue-chips also fell, with Larsen and Toubro losing two per cent and Maruti Suzuki India declining 1.9 per cent.
Among gainers, Bharat Heavy Electricals rose 3.1 per cent after Citigroup upgraded the stock to 'buy' from 'sell' citing better orders, earnings, and under-ownership by institutional investors.
Bharti Airtel gained one per cent after American Tower Corp said on Monday it would buy Bharti Nigeria phone masts for $1.1 billion.
