Snapping a three-day rally, the BSE benchmark index Sensex today pared the early gains and shed 120 points at close on profit-selling by mostly funds.
The Sensex, which gained nearly 251 points in last three sessions, opened 99 points higher before ending 120.01 points down, or 0.75 per cent at 15,922.17, as funds sold heavily in blue-chips in the heavy machinery, PSUs, power, and banking counters on fears that government may withdraw a part of its stimulus package in the forthcoming budget.
However, the realty and consumer durables counters rose following reports that sale of building materials jumped 15 per cent in January, signalling continued economic growth.
The wide-based NSE index Nifty 50, too, lost 35.45points, or 0.74 per cent to 4,757.20,after touching a high of4,826.85.
The index had a 34 points gap-up opening on short-covering by speculators following a 1.52 per cent rally on the Wall Street after G-7 agreed to support the Eurozone nations facing sovereign debt crises.
Marketmen said the stocks are on a southward spiral on waning risk appetite among foreign investors and general investors seen booking profits at existing higher levels.
They also said the markets could not hold on to the early rally as soon after a strong opening the Asian indices stocks began to wear down. Also, the European indices were also only marginally up in their early morning trade.
Among the 30 Sensex stocks, 21 counters closed lower while nine ended with moderate gains. Brokers are of the view that the markets would move in a narrow range till the budget on February 26.