Duty cut spooks Dalal St

Key indices ended 1 per cent down led by a fall in cement stocks following the cut in customs duty. Bank shares were the major losers after State Bank of India reported October-December earnings that missed analysts' estimates.

Weak Asian markets also kept investors cautious. Key indices, which were marginally down since the beginning of the session, fell further after SBI announced the third quarter results.

"Earnings season is now coming to an end and the market will consolidate for some time now. So any negative news is likely to trigger a small correction," a dealer said.

Dealers expect the market to turn volatile ahead of January derivatives contract expiry on Thursday.

The Sensex ended at 14041.24, down 168 points or 1.2 per cent. It touched a low and high of 14025.74 and 14212.12 intraday.

The Nifty ended at 4058.80, down 43.65 points or 1.1 per cent. Intraday, it moved between a low of 4056.45 and a high of 4105.10.

The combined turnover on both exchanges was around Rs 12,000 crore, up from Rs 11,300 crore on Monday. CNX Midcap Index was down 1.3 per cent. Cement shares were the worst hit on the Nifty after the government late Monday removed the 12.5 per cent customs duty on portland cement, making imports cheaper.

However, some market watchers view the selloff today as profit booking owing to the recent run-up in cement shares.

"Today's fall (in cement shares) was sentiment driven, as we are exporters of cement," Prakash Rajdev, chief dealer, Khandwala Securities, said. Gujarat Ambuja Cements and ACC ended down over 7 per cent at Rs 136.50 and Rs 1,036.00, respectively.