Sensex halts rally; Reliance Industries, Coal India fall

The BSE Sensex fell 0.3 percent on Thursday as investors locked in gains after a three-day rally had sent the benchmark to its highest close in more than six months, with another delay in sealing a crucial bailout for Greece also dampening appetite.

Energy major Reliance Industries fell 2.9 percent to its lowest close this month, and extending losses to a third day, on growing worries about falling gas output from its key D6 block. Tata Motors lost 4.2 percent after surging more than 7 percent in the previous session.

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Coal India, the world's biggest coal miner, slumped 5.8 percent -- its biggest fall in more than seven months -- on concerns that a government order to sign a 20-year guaranteed coal supply contract with power producers may hurt its earnings.

Brokerage CLSA downgraded it to "sell" from "outperform" and cut its target price to 315 rupees from 350 rupees, dealers said.

The main 30-share BSE index closed 0.27 percent lower at 18,153.99, with 14 of its components ending lower. The benchmark had climbed 2.6 percent in the past three sessions and is up 17.5 percent since the end of December, after losing nearly a quarter of its value in 2011.

After a substantial rally, some amount of profit-taking is happening," said K.K. Mital, a New Delhi-based fund manager at Globe Capital Market.

"And actually it was Reliance, which dragged the market lower. KG D6 gas output is becoming a major worry," he said.

Gas output from Reliance Industries' Krishna-Godavari D6 block, off India's east coast, may be 66 percent lower than initial estimate from April, government sources said this week.

Reliance Industries, India's most valuable company with a nearly 10 percent weightage in the benchmark index, lost 24.20 rupees to 812.45 rupees.

Foreign funds have been net buyers of about $4.5 billion of Indian shares this year, after being net sellers of more than $500 million in 2011.

As long as liquidity is strong, it is difficult to make a case for a correction. There may be some volatility though," said Neeraj Dewan, director at Quantum Securities in New Delhi.

Sun Pharmaceutical Industries Ltd (SUN.NS) shed 2.8 percent to end at 541.10 rupees after it said Wyeth had claimed $960 million in damages from the company in a lawsuit.

The drugmaker said it disagrees with Wyeth's "overstated" claims and would pursue all available legal options.

The 50-share NSE index fell 0.18 percent to 5,521.95. In the broader market, there were 833 gainers for 630 losers on a total volume of about 1.2 billion shares.

European shares fell and the euro eased to a 3-week low on Thursday as a delay in a decision on a crucial bailout for Greece unnerved investors and prompted a pause in the market rally that has marked the start of 2012.

STOCKS THAT MOVED

Power utility companies extended gains for a second session after the government directed state-run Coal India to sign long-term fuel supply agreements with private power producers.

Adani Power ended up 3.2 percent, Lanco Infra jumped 6.6 percent, Tata Power gained 3.3 percent.

Airline stocks rose after state-run oil marketing companies cut jet fuel prices for the second time in a month, a move that will provide some relief to cash-strapped carriers who have been hit by rising fuel costs.

Shares of Jet Airways rose 2.4 percent. Kingfisher closed 0.6 percent higher even after reporting its net loss for December quarter widened 75 percent from a year earlier. SpiceJet gained 1.6 percent.

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TOP THREE BY VOLUME

Lanco Infra on 107.8 million shares

IFCI Ltd (IFCI.NS) on 59 million shares

Unitech Ltd on 37.1 million shares