By Bharath Rajeswaran and Ashna Teresa Britto
BENGALURU (Reuters) -Indian shares declined on Wednesday on broad-based selling pressure at near record high levels, while small- and mid-caps were on course for their worst session in over a month, ahead of results of a stress test of mutual funds.
The blue-chip NSE Nifty 50 index lost 1.12% to 22,086.50, while the BSE Sensex lost 0.89% to 73,010.06, as of 1:38 p.m. IST.
Both benchmarks had opened with a 0.3% gain. Twelve of the 13 major sectors logged losses.
“This is a case of classic profit taking and consolidation happening at near record high levels for benchmarks,” Kranthi Bathini, equity strategist at WealthMills Securities, said.
“It is the overheated segments like realty, state-owned banks and energy stocks that are seeing the most selling pressure.”
State-owned banks, energy, realty and metals lost between 2.7% and 4.5%.
The broader, domestically-focussed small- and mid-caps dropped 4% and 3%, underperforming the benchmarks. They are set for their worst session in over a month, if losses hold.
So far in March, small- and mid-caps are down 9.25% and 4%, compared with 0.4% rise in Nifty 50, on rising concerns of potential froth.
The stress tests of mutual funds, as directed by the Securities and Exchange Board of India, will be disclosed from March 15.
This will keep the pressure on the broader market in the near term, according to analysts.
“The gap in returns between large- and small-, mid-caps will get narrowed down in two ways, one the small- and mid-caps will correct and large-caps will remain flattish, or, they will not fall much,” Shankar Sharma, founder of GQuant and First Global, said.
Fast-moving consumer goods gained 0.5%. ITC jumped 5.3% after British American Tobacco announced completion of block trades worth 166.9 billion rupees (about $2 billion).
($1 = 82.8837 Indian rupees)
(Reporting by Bharath Rajeswaran and Ashna Teresa Britto in Bengaluru; Editing by Sohini Goswami, Savio D’Souza and Mrigank Dhaniwala)
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