Indian shares fell on Thursday, snapping a three-session winning streak and retreating from three-month highs, as investors took profits in recent outperforming blue chips such as Reliance Industries and Sun Pharmaceutical.
India's benchmark index has risen about 9 percent since mid-April, helped by a surge in foreign buying that analysts say is tied to a rally in the global markets as easier monetary policies worldwide spark demand for riskier assets.
However, investors say consumer price index and industrial production data, due on Friday, followed by wholesale inflation data on Monday, will be the next key triggers given continued concerns about the country's economic outlook.
Political scandals have also raised concerns. India's Supreme Court accused the government on Wednesday of interfering in a police investigation into the allocation of commercial coalfields, in a damning indictment of political control over India's top law enforcement agency.
"The fall seems to be on profit booking as we gained for so many sessions, but the current mood should take it to new highs in the next few weeks," said Sandip Sabharwal, CEO - PMS at Prabhudas Lilladher.
However, one should watch out for a significant correction in the developed markets as it can be something that may change the mood, Sabharwal added.
The benchmark BSE index fell 0.26 percent, or 51.14 points, to end at 19,939.04, after closing at its highest since Jan. 30 on Wednesday.
The broader NSE index fell 0.32 percent, or 19.15 points, to end at 6,050.15.
Foreign investors have been net buyers for 14 consecutive sessions, bringing their total for the year to $12.54 billion, regulatory data shows.
The markets, however, fell on Thursday as recently outperforming blue chips were hit by profit-taking. Sun Pharmaceutical Industries fell 3.8 percent after gaining 20.3 percent since March end, while Reliance Industries Ltd ended 1.4 percent lower.
Housing Development Finance Corporation Ltd also succumbed to profit-taking, ending 0.5 percent lower, after earlier making its all-time high of 900.85 rupees in the session.
Shares of companies reporting disappointing earnings also fell. Asian Paints Ltd shares fell 3.8 percent after its March-quarter net profit declined by 3.1 percent to 2.51 billion rupees.
Jubilant Foodworks Ltd shares ended 7.4 percent lower after its March-quarter profit rose by 11.52 percent to 327.1 million rupees, lagging analyst expectations.
Bajaj Hindusthan Ltd shares ended 2.3 percent lower after its Jan-March profit fell 77.8 percent to 19.5 million rupees.
Apollo Tyres Ltd fell 3.2 percent after Goldman Sachs downgraded the stock to "neutral" from "buy", also removing it from its Asia Pacific buy list, citing limited upside to its new target price of 103 rupees.
Apollo Tyres will report March-quarter results on Friday.
Among the stocks that gained, State Bank of India (SBI) rose 1.6 percent after state-run rivals Punjab National Bank and Union Bank of India Ltd reported a sequential improvement in asset quality for the January-March quarter.
The results have raised expectations that SBI, India's biggest state-run bank, may also report flat or improving non-performing assets for the previous quarter.
PNB shares rose 4.6 percent, while Union Bank shares gained 1.4 percent.