Image: Wikimedia Commons.

Indian stocks have started off the fourth quarter on a strong note, but the market's winning streak came to an end on Thursday. After six straight days of gains, the BSE Sensex (NYSEINDEX: ^BSESN) ended the day down 190 points to close at 26,846, following the general downward trend throughout much of Asia.

Among the Sensex's 30 stocks, the biggest loss came from conglomerate Reliance Industries, which declined almost 3%. The financial sector was also somewhat weak, with ICICI Bank posting a loss of more than 1.5% and with other notable banks like HDFC seeing more modest declines. Cigarette company ITC was also among the bigger losing stocks with a 2% drop.

Pockets of strength still made themselves evident despite the market's overall decline. Tata Motors once again managed to eke out a 0.5% gain, building on a big rise earlier in the week. Similarly, some players in the pharmaceutical industry fared well, with Dr. Reddy's Labs climbing half a percent. Strength in the commodity sector also continued, with Vedanta and Tata Steel posting the biggest gains in the index in the hopes that the metals and other commodities they produce will finally start to recover from a long period of bad conditions.

How far can India climb?
The long streak of gains that ended Thursday made sense in light of the unexpectedly large interest rate cut from India's central bank, which made it clear that policymakers are aware of threats to the country's still-strong economic growth and want to fight back against them before they take root. Yet stimulus measures can only go so far, and in the end, it's up to the companies in the index themselves to produce the results that policymakers want to see.

Concerns about the coming earnings season also weighed on sentiment. Infosys (NYSE:INFY) is set to report its latest results early next week, and although those following the stock expect a gain in revenue, earnings will likely be flat from year-ago levels. Other players in the IT consultancy field are seeing similar trends, and if earnings throughout India's major stocks are poor, it could exacerbate the declines the nation's markets have seen in recent months.

In an increasingly global economy, Indian markets are still heavily influenced by what's happening to neighboring countries in Asia as well as other major trade partners around the world. India does have a chance to stand out from the crowd if it can prove that its economy is more resistant to the factors that have hurt fellow emerging markets like Brazil and China. Investors should watch closely to see if India can succeed where its peers have struggled.