Sensex, Nifty fall for second day on profit-taking, derivative sales

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex and Nifty fell for a second straight session on Friday as profit-taking continued in blue-chips such as ICICI Bank after a string of records earlier this week, while foreign investor sales in equity derivatives also weighed.

Overseas investors sold index futures worth 5.91 billion rupees ($97.9 million) and stock futures worth 6.77 billion rupees on Thursday, exchange data showed.

That marked a rare day of selling given that foreign investors have been largely buying cash shares this year, worth a total of over $13 billion so far, thanks in part to easy monetary policies globally.

 

The European Central Bank on Thursday went further, cutting interest rates and embarking on a trillion-euro asset-buying binge.

Still, when the Federal Reserve removes its stimulus is seen as the most important factor. All eyes are thus now on U.S. August payrolls data due later in the day.

Some analysts said they expected the United States to maintain an easy stance, which could help keep a rally in Indian shares going, given the optimism about the domestic economy.

"Steady rise in Indian equities would continue amid economic recovery, supportive global liquidity, and falling commodity prices," said Hemant Kanawala, head of equity at Kotak Life Insurance.

The benchmark BSE Sensex fell 0.22 percent, or 59.23 points, to end at 27,026.70, down from a record high of 27,225.85 hit on Wednesday.

Still, the index managed its fourth consecutive weekly gain of 1.5 percent.

The broader Nifty lost 0.11 percent, or 9.10 points, to end at 8,086.85. It rose 1.7 percent for the week.

Profit-taking hit blue-chips for a second consecutive session, sending ICICI Bank down 1.6 percent, while Housing Development Finance Corp ended down 2.3 percent.

Among other decliners, Tata Motors lost 1.4 percent, while Coal India ended down 2.3 percent.

Jaiprakash Associates Ltd lost 10.1 percent, adding to Thursday's 17.6 percent slump on continued speculation about whether promoters were reducing their stakes.

The company on Thursday clarified in a statement that one of its promoters had reduced stake in the company to 28.30 percent from 29.75 percent.

Broader losses were however limited as midcap shares gained with the NSE midcap index ending 0.3 percent higher after marking its third consecutive all-time high.

Lloyd Electric and Engineering surged 8.9 percent on attractive valuations relative to rivals.

The consumer appliance maker trades at 6 times of its one-year forward earnings. That compares to 24 times of rival Voltas , Thomson Reuters data shows.

Software stocks gained on continued hopes of better business in the United States and Europe after recent positive macro data such as U.S. ISM manufacturing.

Infosys rose 0.6 percent, while Tata Consultancy Services gained 0.5 percent.

(Editing by Subhranshu Sahu)