Markets snap six-day rally on global cues

Indian markets on Thursday fell on profit-taking and weak global cues following six days of gains, which saw the benchmark indices climb over five per cent to six-week highs. Investors turned cautious ahead of the start of the earnings season. Most global stocks, too, fell after unexpected weak trade data from Germany cast doubt over global growth. The benchmark Sensex fell 190 points, or 0.7 per cent, to 26,846. The Nifty fell 48 points, or 0.6 per cent, to close at 8,129.

(Profit-taking is selling a security to lock in gains after it has risen appreciably. If there is an unexpected decline in a stock or equity index that has been rising, and no reason for the drop can be identified, the decline is frequently attributed to profit-taking.)

Reliance Industries Ltd (RIL) fell three per cent on reports it might have to pay a fine of ~12,000 crore in an oilblock-related dispute with state-owned Oil and Natural Gas Corporation (ONGC). RIL may have extracted 12 to 18 billion cubic metres of gas from the block belonging to ONGC in the KrishnaGodavari basin, a television channel reported, citing petroleum ministry officials it didn't identify. ONGC shares ended 0.43 per cent lower.

Shares of ITC fell two per cent on reports that Uttar Pradesh, the country's most populous state, might impose a ban on cigarettes sold on a loose basis.

The market breadth on Thursday was mixed, with nearly one advancing stock for every declining one.

"The pause is just a technical halt. The market direction will depend on how the earnings' season plays out," R K Gupta, managing director, Taurus Asset Management Company.

The Sensex has rallied 5.5 per cent since September 29, when the Reserve Bank of India (RBI) cut its benchmark interest rate by more than what economists forecast. The seven-day relative strength index (RSI) climbed above 70 on Tuesday. Some investors see a level above this reading as a signal to sell.

After two continuous months of outflows, the Indian market has seen some relief from foreign investor selling. So far in October, foreign institutional investors (FIIs) have invested ~1,600 crore in Indian markets. FIIs have bought $3.8 billion of the nation's shares this year, the most among eight Asian markets tracked by Bloomberg.

The market breadth on Thursday was mixed — nearly one advancing stock for every declining one