BSE Sensex falls on profit-taking; wholesale inflation key

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell on Tuesday led by declines in software exporters such as Tata Consultancy Services on profit-taking after the recent run-up on better-than-expected quarterly results by peer Infosys.

Falls also tracked weak global shares as a batch of weak earnings pre-announcements in the United States sparked concerns that the upcoming reporting season may disappoint, leaving some indexes looking expensive after a bumper 2013.

After retail inflation in December eased to a three-month low on Monday, traders are eyeing December wholesale price inflation, seen at 7 percent and due Wednesday, and considered to be key ahead of the RBI's rate review on January 28.

 

Retail prices rose an annual 9.87 percent last month, slower than expected, as vegetable prices fell, giving some relief to policymakers struggling to contain price pressures as growth hovers at a decade low.

Also, a surprise contraction in industrial production and a slowdown in merchandise exports growth, which have dampened hopes of a rebound in Asia's third-largest economy, further reduces the chances of a rate hike, dealers said.

"Growth for India has bottomed out and even valuations look reasonable. Inflation has eased and I think a delay in rate action by the RBI governor signifies he may side with growth," said Nandkumar Surti, managing director and chief executive officer at JP Morgan Asset Management.

The Sensex fell 0.48 percent, or 101.33 points, to end at 21,032.88, after rising over 2 percent over the last two consecutive sessions.

The Nifty lost 0.49 percent, or 30.90 points, to end at 6,241.85.

Software companies fell on profit-taking after the recent run-up on Infosys' better-than-expected quarterly results.

Tata Consultancy Services fell 1.8 percent, HCL Technologies ended down 1.7 percent and Wipro lost 1.4 percent.

Infosys, however, closed 0.6 percent higher.

CMC fell 10.5 percent after its October-December profit rose 15.53 percent to 705.4 million rupees, falling short of some analysts expectations.

Ranbaxy Laboratories fell 2 percent, adding to Monday's 5.4 percent slump, after the U.S. Food and Drug Administration raised concerns about manufacturing practices at one of its factories.

Retail stocks fell after the newly-elected government in Delhi on Monday barred foreign supermarkets from setting up shop, a blow to Prime Minister Manmohan Singh's efforts to attract overseas investment and revive the economy.

Trent <.NS> fell 2.7 percent while Shopper's Stop ended 1.7 percent lower.

However, among other stocks that gained, Yes Bank rose 2.3 percent a day ahead of its October-December results.

The bank may beat consensus profit forecast when it reports results, Thomson Reuters StarMine's SmartEstimates showed.

Cairn India rose 2 percent after mining conglomerate Vedanta Resources Plc said it received 99.89 percentage of votes in favour of a proposed share buyback worth up to 57.25 billion rupees by its Indian oil and gas unit.

(Editing by Sunil Nair)