Indian shares snapped their three-day winning streak as blue-chips such as ICICI Bank fell on risk aversion after Chinese stocks posted their biggest daily drop in two weeks, while caution prevailed a day ahead of the monthly derivatives expiry.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 2 per cent on profit-taking.

ICICI Bank fell 1.7 per cent, while Larsen & Toubro ended 1.9 per cent lower.

The benchmark BSE index plunged 195.33 points or 0.71 per cent at 27,506.46 and the broader NSE index lost 57 points or 0.68 per cent at 8,267, marking their biggest daily fall in a week.

Domestic sentiment was also hit as the poll trends do not indicate that the Modi-led BJP will have majority in Jharkhand or in Jammu and Kashmir.

According to traders, markets have discounted clean sweep by BJP in both states.

Also, the NSE index also faced technical resistance at 20-day moving average.

Barring FMCG, all other BSE sectoral indices ended in the red. Among them, metal index fell the most by 1.89 per cent, followed by capital goods 1.46 per cent, consumer durables 1.39 per cent and oil & gas 0.96 per cent.

Major Sensex gainers were NTPC (3.03%), Bajaj Auto (2.24%), Cipla (1.71%), Bharti Airtel (1.65%) and Hero MotoCorp (0.88%), while the top five losers were Tata Power (3.27%), SSLT (3.13%), Tata Steel (2.28%), Coal India (1.92%) and L&T (1.91%).

Early poll results

The shares rose for a fourth consecutive session to head towards their highest close in two weeks after early poll results indicated Prime Minister Narendra Modi's party gaining in the elections of Jharkhand as well as Jammu and Kashmir.

But trading could turn volatile on Wednesday given the expiry of monthly equity derivatives contracts.

"These trends indicate BJP tally would increase in Rajya Sabha in the coming years. So expect more push on reforms," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.

The NSE index rose 0.22 per cent to 8,242.80, while the benchmark BSE index gained 0.23 per cent to 27,435.13, heading towards their highest close since December 8.

The gains came after early results from the Election Commission of India showed the BJP leading in the vote count in Jharkhand as well as Jammu and Kashmir.

Banks led gainers, helped as well by continued hopes the Reserve Bank of India would cut interest rates in early 2015. State Bank of India rose 0.7 per cent, while Axis Bank gained 0.6 per cent.

Housing Development Finance Corp rose 1.5 per cent on its plan to sell up to 0.95 per cent stake in life insurance unit to Azim Premji Trust.

Brokers' comment

Brokers said buying activity gathered momentum on strong cues from global markets with the Russian rouble gaining some stability amid higher opening in other Asian markets, following overnight gains in US markets ahead of economic data releases.

Further, covering-up of pending short positions by speculators in view of monthly settlement in the derivatives segment as the markets will remain closed on Thursday on account of 'Christmas', also supported the rise, they said.

Global markets

European shares rose in early trading on Tuesday, gaining ground for the sixth session in a row and tracking a rally on Wall Street where both the Dow and S&P 500 ended at record highs.

A holiday lull settled over Asian markets on Tuesday after Wall Street closed at historic highs, while oil prices suffered a stinging setback after Saudi Arabia quashed all thought of curbing supply.

Equity investors chose to focus on the benefits that falling fuel prices would have for consumer spending power.

Trading was light in Asia with Japanese markets shut for a holiday. Australian stocks ran into profit-taking after three sessions of sharp gains and dipped 0.5 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent, though markets in Singapore and Taiwan both inched ahead.

Among other Asian markets, Hong Kong’s Hang Seng index was up by 0.29 per cent in early trade, while Japan’s financial markets will remain closed today for a public holiday.

On Wall Street, the S&P 500 had put on 0.38 per cent to score an all-time closing high on Monday, while the Dow added 0.87 per cent and the Nasdaq 0.34 per cent.

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