The BSE Sensex fell on Thursday as Infosys slumped after its chairman said revenue could grow at the lower end of guidance for this fiscal year, while Sun Pharmaceutical Industries dropped after a U.S. ban on some of the drug-maker's imports.
Investors also booked profits in some of the recent outperformers that propelled indexes to record highs earlier this week, with some analysts voicing concerns about how fast shares have risen since last week.
The falls came despite data on Wednesday showing a sharper-than-expected drop in retail inflation and a slight expansion in industrial output, as analysts say expectations for an improving domestic economy are already largely priced in.
"We expect markets to trade range-bound for the near-term. Profit-taking is expected in select stocks and counters," said Deven Choksey, managing director, KR Choksey Securities.
The Sensex fell 0.37 percent, or 81.61 points, to end at 21,774.61 points, still near its record high of 22,023.98 points hit on Monday.
The Nifty also fell 0.37 percent, or 23.80 points to 6,493.10 points, near its all-time high of 6,562.85 points hit on Tuesday.
Foreign investors on Wednesday were net buyers for an eighteenth session out of the previous nineteen, with purchases of $250 million.
Despite continued buying by overseas funds, broader indexes fell after Infosys Ltd slumped 8.5 percent. Chairman Narayana Murthy said revenue for the fiscal year ending March could grow at the lower end of the company's 11.5 to 12 percent projection.
The fall on Thursday was Infosys' biggest daily percentage fall since April 12 last year when shares slumped 21.3 percent after the IT outsourcer issued a disappointing forecast for full-year sales growth.
Meanwhile, shares in Sun Pharmaceutical Industries lost 5.19 percent after the U.S. Food and Drug Administration (FDA) banned imports from the drug-maker's plant at Karkhadi in the western state of Gujarat.
It was not immediately clear why the FDA imposed the ban.
Among other stocks, real-estate developers fell sharply with the BSE realty index <.BSEREAL> losing 3.4 percent on profit taking. DLF Ltd fell 6.03 percent after gaining nearly 27 percent so far this month, as of Wednesday's close.
However, some lenders gained, extending a recent rally. HDFC Bank Ltd rose 2.3 percent, bringing its monthly gain to 10.9 percent, while State Bank of India rose 0.4 percent, brining its gain so far in March to 7.8 percent.
State-run oil marketing companies also gained sharply, with Indian Oil Corp. up 4.2 percent, on media reports that the government may start distributing its oil subsidy for the October-December quarter starting from March 18.