The BSE Sensex fell on Thursday after touching its ninth consecutive record high as state-run banks such as State Bank of India slumped on concerns about losses on their debt portfolios as domestic bonds extended a slide this week.
Shares were also hit as blue chips including Reliance Industries fell on profit-taking ahead of European Central Bank’s policy decision later in the day and monthly U.S. jobs data on Friday.
Caution is also likely to prevail as India heads into the five-week long elections starting on Monday.
“Some paring of positions after such a strong rally ahead of elections is on expected lines,” said Phani Sekhar, a fund manager at Angel Broking.
Nifty fell 0.24 per cent after earlier rising as much as 0.36 per cent to a lifetime high of 6,776.75. The falls marked the index’s first fall in 11 sessions.
The BSE Sensex fell 0.19 per cent after earlier rising as much as 0.31 per cent to a record high of 22,620.65.
Still, heavy foreign buying has continued to underpin share gains. Overseas investors bought a net Rs. 595 crore worth of shares on Wednesday, bringing the total since February to nearly $3.5 billion.
State-run banks fell after the benchmark 10-year bond yield rose to as high as 8.9952 per cent, the highest level since December 6, triggering worries about potential mark-to-market loss on their bond portfolios.
State Bank of India fell 2 per cent, Punjab National Bank ended down 2.1 per cent, while Bank of Baroda lost 2.3 per cent.
Other blue chips were hit by profit-taking. Reliance Industries Ltd lost 0.6 per cent, while ICICI Bank Ltd ended down 0.8 per cent.
IDFC Ltd ended 2.3 per cent down on worries regulatory requirements for banks would weigh on its return ratios after the Reserve Bank of India on Wednesday granted preliminary bank licence to the infrastructure sector lender, sending its shares up as much as 8.8 per cent.
Applicants who failed to win a licence at this stage slumped. L&T Finance Holdings Ltd plunged 9.7 per cent, while LIC Housing Finance Ltd lost 1.3 per cent.