Indian shares snapped a four-day rally on Tuesday despite rises in technology and drug stocks, while the rupee fell from near a four-year high as the central bank absorbed investment inflows.
The 30-issue Bombay Stock Exchange index fell 0.27 percent to 5,822.42 points, with losers outnumbering gainers nearly two to one in modest trade of 107 million shares.
"Domestic funds booked profits after the recent rally and there is also a fair amount of portfolio reallocation in favour of banks and state-run firms ahead of fourth quarter earnings," said Sandeep Shenoy, an analyst at Pioneer Intermediaries.
Associated Cement Companies Ltd, India's biggest cement producer, fell nearly two percent to 258.20 rupees.
Tata Motors Ltd, the biggest bus and truck maker, fell 1.6 percent to 500.75 rupees. Bajaj Auto Ltd, the No 2 motorcycle maker, fell two percent to 892.50 rupees.
"The index could go down by another 50-80 points, and will top out at the 5,850 level," Shenoy said. "Infosys earnings next week will be the biggest trigger, and an aggressive guidance will boost the index significantly".
Indian firms will begin announcing their fiscal fourth quarter results from later this week.
Infosys, the No 2 exporter of software and services, rose 2.7 percent to 5,312.15 points as the stock split and bonus issue indicated better stock liquidity and the firm's expectation of improved performance. Rival Wipro Ltd, the No 3 exporter, added 1.2 percent to 1,408.65 rupees.
Drug makers gained after the United Nations, World Bank, the Global Fund and former US president Bill Clinton announced a joint plan to buy cheap generic AIDS drugs, primarily from India, for distribution in poor countries.
Ranbaxy Laboratories Ltd, which is included in the plan, rose 2.2 percent to 1,011.15 rupees.
Traders said were it not for central bank intervention, the Indian unit would have appreciated despite the dollar's global surge.
Foreign investors are buying Indian shares expecting robust earnings announcements, with the economy leaping ahead.
Bond yields edged up amid wariness over the outlook for money market liquidity after the central bank held the first of its bond sales under a scheme to drain surplus cash from the market.
The key 10-year yield was nudged up to 5.1282 percent, from Monday's 5.1262 percent.
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