MUMBAI: Indian shares were headed for their first drop in three sessions on Monday, taking a breather after the Nifty scaled an all-time high last week, as software services exporters remained under pressure on worries about a stronger rupee.
Idea Cellular Ltd fell as much as 14.57 percent, reversing earlier gains of 14.25 percent, after the telecom services provider said it would merge with Vodafone Plc's Indian operations.
Although traders had initially reacted positively to the news, doubts about Idea's valuations after the merger sent shares downward, according to traders.
Still, overall sentiment remains positive on hopes for additional economic reforms from the government. India's cabinet approved four bills to implement a planned Goods and Services Tax (GST), a government official said on Monday, paving the way for the country to implement the landmark tax reform from July.
But concerns about share valuations and a lack of big events are likely to keep trading rangebound, analysts said.
"We have moved to an event vacuum stage as the quarterly results are some two-three weeks away. We have little of major events now. After testing the 9,200 levels (in Nifty), markets have little to fuel further rally. Investors are looking for bargains," said Anand James, chief market strategist at Geojit Financial Services.
The broader Nifty was down 0.46 percent at 9,117.20 by 0556 GMT. It hit a record high of 9,218.40 on Friday.
The benchmark Sensex was 0.52 percent lower at 29,495.73.
The IT sector accounted for around 50 percent of the losses on the Nifty50 index, led by Infosys Ltd which was down around 2 percent.
The rupee strengthened slightly to 65.4124/4150 per dollar, not far from the near 17-month high of 65.2250 hit last week, raising concerns about overseas returns in the sector.
Among the gainers, Kotak Mahindra Bank was up 1.23 percent after the bank said on Friday that it would seek approval from shareholders to raise the foreign shareholding limit up to 49 percent.