The Sensex and Nifty ended lower, snapping a six-day record-setting rally, as profit-taking hit IT stocks while large state-run lenders slid as they stood to receive less money than expected from a government recapitalisation plan.

The 30-share BSE index Sensex closed lower by 111.20 points or 0.31 per cent at 36,050.44 against the previous close of 36,161.64 and the 50-share NSE index Nifty ended down by 16.35 points or 0.15 per cent at 11,069.65 against yesterday's close of 11,086.

Both indexes posted their fourth consecutive weekly gain. The BSE index gained 1.52 per cent and the NSE index ended the week 1.61 per cent higher.

Barring metal and capital goods, all other BSE sectoral indices ended in the negative zone. Among them, IT index plunged 1.5 per cent, followed by TECk 1.39 per cent, PSU 1.32 per cent and realty 0.99 per cent. On the other hand, metal index was up 0.97 per cent and capital goods 0.59 per cent.

Top five Sensex gainers were ICICI Bank (+1.6%), Coal India (+1.56%), Kotak Bank (+0.99%), Axis Bank (+0.96%) and L&T (+0.9%), while the major losers were State Bank of India (-4.96%), Adani Ports (-2.37%), Dr Reddy's (-2.26%), Hero MotoCorp (-1.95%) and TCS (-1.79%).

Shares of State Bank of India and other big state-run banks fell as they stood to receive less money than investors had expected from the government's much-awaited recapitalisation plan . By contrast, smaller state-run lenders such as UCO Bank gained, as analysts said they would receive more funds than expected.

Bonds fall on crude rally

Bonds fell, sending the benchmark 10-year yield up 4 basis points to 7.48 per cent, after oil prices rallied on heavy volume, boosted by a record 10th straight weekly decline in US crude inventories.

But the rupee strengthened to 63.49 per dollar from its previous close of 63.70, tracking a rally in Asian currencies after US Treasury Secretary Steven Mnuchin welcomed a weaker dollar , calling it good for trade, in a departure from traditional US policy.

Overall sentiment was cautious as investors awaited the annual budget for the fiscal year starting in April to be unveiled on February 1. Expiry of monthly derivative contracts at the end of the session, after indexes hit record highs in each of the six previous sessions, also kept the sentiment in check.

“Markets are usually volatile on the settlement date for futures and options contracts. Now, markets are waiting for the annual budget,” said R K Gupta, managing director at Taurus Asset Management.

Markets will remain shut tomorrow on account of ’Republic Day’.

Asian stocks held near a record high though concerns about the Trump administration's protectionist stance cast a shadow on financial markets, while the dollar was under pressure after US Treasury Secretary Steven Mnuchin welcomed a weaker currency.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.15 per cent, while Japan's Nikkei fell 0.8 per cent, hit by the dollar's decline against the yen. MSCI ACWI, the index provider's broadest gauge of the world's stock markets, extended its gain so far this month to 6.5 per cent on Wednesday, posting rise in 14 out of 16 US business days.

Wall Street shares were mixed, however, as a boost from solid earnings were offset by trade protectionism worries fanned by US President Donald Trump's decision to impose steep import tariffs on washing machines and solar panels earlier in the week.

(With inputs from Reuters)

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