By Indulal PM
MUMBAI (Reuters) - The BSE Sensex fell on Friday, retreating from fourth consecutive record highs hit earlier in the session on the back of disappointment over earnings from market heavyweights including ICICI Bank Ltd.
The results sparked doubts about the premise of a rally that has sent the Nifty up 7.6 percent so far this year, already more than its 6.8 percent rise in the whole of last year.
The gains this year have been premised not only on the prospect of the Bharatiya Janata Party winning the elections that would conclude by mid-May, but also on the prospect of a recovery in the domestic economy.
Inflation fears could also revive after the Meteorological Department on Thursday forecast the country would see below-average monsoon rainfall in 2014, raising the possibility of drought.
Yet, heavy buying by foreign investors since the start of February has supported shares so far. Overseas funds were buyers for a fourth consecutive session on Wednesday, bringing their total this year to 298 billion rupees ($4.88 billion).
"We expect markets to be volatile and consolidate around the current levels till the time of election results," said Dipen Shah, head of a private client group at Kotak Securities.
"There would be stock-specific movements based on quarterly earnings. Overall if you are looking at a longer term on a 9 month to a year basis, we advise to have a portfolio of cyclical and domestic investment oriented stocks."
The BSE index closed 0.82 percent lower at 22,688.07. The index had earlier risen to an all-time high of 22,939.31, having hit a record in each of the four trading sessions this week, though it ended with a mild 0.26 percent gain for the week.
The Nifty closed 0.85 percent down at 6,782.75. The index gained 0.1 percent in the week, after earlier hitting a record at 6,869.85.
ICICI Bank fell 2.24 percent despite posting a better-than-expected 15 percent rise in January-March net profit. Dealers say the bank's results were helped by a one-time foreign exchange gain estimated at 2.22 billion rupees ($36.36 million).
Shares in Maruti Suzuki India Ltd fell 1.3 percent after posting a worse-than-expected 35 percent drop in January-March net profit.
Cairn India plunged 4.94 percent after its net profit lagged some analysts' estimates, especially after adjusting for other income.
Meanwhile, ACC Ltd fell 2.73 percent and Ambuja Cements India Ltd closed 4.43 percent lower even as their earnings beat forecasts. Dealers said other income and tax credit contributed significantly to their net profits.
Among the gainers, Alstom SA's Indian units surged after Bloomberg reported on Wednesday that General Electric Co was in talks to buy the struggling French turbine and train maker parent for about $13 billion.
Alstom India Ltd gained 4.13 percent, while Alstom T&D India Ltd jumped 5.87 percent.
(Editing by Anupama Dwivedi)