After closing at its record high last week, the S&P BSE Sensex, on Tuesday, plunged 265 points or 1.25 per cent to close at 20974.79 following profit-booking in stocks that had surged in the past few sessions. However, buying activity was witnessed in mid- and small-cap stocks.

The top five losers in the 30-share Sensex included ITC, down 3.52 per cent; ICICI Bank (-3.07 per cent); Sun Pharma (-2.96 per cent); Dr. Reddy’s Lab (-2.88 per cent); and TCS (-2.74 per cent).

The Sensex top gainers included Hindalco up 1.47 per cent; Coal India (1.42 per cent) and Tata Motors (1.02 per cent).

The NSE Nifty also closed with a loss of 64.20 points or 1.02 per cent at 6253.15 due to selling pressure in key stocks.

“It was an over-bought market and profit-booking was imminent which happened today. Apart from this, here emerges a clear-cut sign that the rupee would fall to the level of 63.5 or 64 to a dollar the moment the RBI withdraws its measures. If the rupee drops, then the FIIs will stop buying, and this was why the market was under selling pressure,” said Deven Choksey, CEO and Managing Director, KR Choksey Share and Securities.

“Soft global markets and continued uncertainty about the Fed’s taper program have resulted in some caution in the markets on the first day of the new year. The Purchasing Managers Index (PMI) data for October has shown some improvement month-on-month but continues to be in contraction territory,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.

“Domestic markets were quite strong during last month and were supported by foreign liquidity. Largely in-line or better-than-expected quarterly results also helped. The strength in the domestic currency and increased optimism on reduction in current account deficit also helped,” Mr. Shah said in the reasons why the market was bullish last month.

Focus

“We believe that, focus of the markets in the near-term will continue to remain on global liquidity, Q2FY14 results as well as outcome of the state elections which are going to be held in five states from November 11, 2013,” Mr. Shah added.

Rupee recovers

PTI reports:

The rupee rebounded after edging close to the 62-level against the dollar and ended with a 12 paise gain at 61.62 on Tuesday as banks and exporters sold the U.S. currency on expectations of continued capital inflows.

The rupee resumed at 61.95 from the previous close of 61.74 at the inter-bank foreign exchange market on initial dollar demand from banks and importers. It recovered to 61.6150 on fag-end dollar sales by banks and exporters before ending at 61.62, a gain of 12 paise, snapping two days of losses.