Indian shares slipped 0.4 percent on Tuesday as investors locked in gains after a revival of foreign interest triggered the recent sharp rally, while views the rise could have been overdone kept the near-term outlook uncertain. Energy giant Reliance Industries led the decline, with a 2.6 percent drop on a lack of near-term triggers. The stock is down by a fifth so far in 2011.
The 30-share BSE index fell 0.37 percent, or 69.92 points, to 18,744.56 points after starting higher, and 18 components lost ground. It had gained 1.9 percent in June, its first monthly gain in three. The 50-share NSE index fell 0.3 percent at 5,632.10.
Gainers and losers were almost equal in number on the NSE, while 558 million shares changed hands, lower than the 90-day daily average volume of 590 million shares. "The rally was too sharp and too fast. It is quite natural that profit sales would come in after that," said Ambareesh Baliga, chief operating officer at Way2Wealth Securities.
Foreign funds pumped in more than $1 billion since the start of June to July 1, as risk was back in favour on some relief over Greece's debt situation, re-igniting interest in emerging market bets.
"Commodity prices are coming off, and the money from there seems to diverted to equities," said Rakesh Rawal, head of private wealth management at Anand Rathi. Idea Cellular slid 2.4 percent after an Indian court directed the country's fifth-biggest mobile carrier to seek prior permission from the telecoms ministry for transfer of six telecoms licences it gained from the acquisition of a smaller rival.
Power equipment maker Bharat Heavy Electricals tumbled 4.7 percent on media reports the government was likely to approve disinvestment of a 5 percent stake in the state-run firm next week, dealers said. Cigarette-to-hotels business ITC fell 1.6 percent, but is still up 12 percent so far this year.
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