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The Sensex snapped a four-day winning streak on Monday, retreating from near two-and-a- half year high, as investors booked profits in rate-sensitive stocks such as ICICI Bank, while drugmakers were hit by worries about the country's new drug pricing policy.
Caution also prevailed after Standard & Poor's statement reiterating its 'negative' outlook on India's sovereign ratings, which came out shortly before the close of markets on Friday.
Analysts said some consolidation was due for domestic markets after the benchmark BSE Sensex has rallied about 11 per cent rally since mid-April due to strong foreign inflows.
Foreign investors have been net buyers for 22 consecutive sessions as of Friday, bringing in a net of about $13.52 billion in 2013, regulatory and exchange data shows.
There are no signals so far that liquidity is abating so one can look to accumulate good stocks on declines, added Choksey.
The benchmark BSE Sensex fell 0.31 per cent, or 62.14 points, to end at 20,223.98, retreating from its highest level hit intraday since January 5, 2011.
The broader Nifty fell 0.49 per cent, or 30.40 points, to end at 6,156.90, after earlier hitting its highest level since November 11, 2010.
ICICI Bank fell 1.7 per cent after climbing as high as Rs 1,236.9 on Friday, its highest since November 2010.
Among other lenders or interest rate-sensitive stocks, HDFC Bank fell 0.6 per cent, while Housing Development Finance Corporation ended down 0.55 per cent.
Cipla fell 1.9 per cent and Dr Reddy's Laboratories ended 1.6 per cent lower.
Shares in Lupin slumped 4.3 per cent after rival Mylan Inc launched a generic version of the cholesterol-lowering Tricor tablets.
Apollo Hospitals Enterprises shares fell 6.5 per cent after its March quarter profit rose 27.3 per cent to Rs 75.52 crore, but lagged expectations.
However, among stocks that gained, Coal India rose 1.3 per cent ahead of its March-quarter earnings later in the day.
Mahindra and Mahindra gained 1.5 per cent, after shares of its subsidiary Ssangyong Motor Co hit a 16-month high.
