The benchmark indices on Tuesday continued to trade lower after rising about 0.7% in the previous session, as recent outperformers such as banks were hit by profit-taking with analysts warning markets could head for a phase of consolidation this week.
At 01:22 pm, the S&P BSE Sensex was trading at 28,984, down 64 points, while the broader Nifty50 was ruling at 8,941, down 22 points.
The Nifty has been hovering below its key psychological level of 9,000 this month but has been unable to break above it.
In the broader market, the BSE Midcap index outperformed the frontline indices, while BSE Smallcap was little changed.
The market breadth, indicating the overall health of the market, was negative. On the BSE, 1,506 shares declined and 1,026 shares rose. A total of 143 shares were unchanged.
The direction of markets will likely hinge on the results of the elections in Uttar Pradesh, due on Saturday, which will have a key influence on Prime Minister Narendra Modi's chances of clinching a second term in 2019.
Meanwhile, investors also await the US Federal Reserve meeting next week, where it is widely expected to raise interest rates.
Tata Steel was the top loser on Sensex and lost over 2% to Rs 483.
Financial stocks fell, led by Axis Bank and Yes Bank. Both were down more than 1%.
Banks have been among the top gainers this year after a ban on high-value currency notes late last year led to a surge in deposits.
Among the gainers, South Indian Bank rose over 3% after the Reserve Bank of India removed the bank from its foreign investment caution list.
Trigyn Technologies hit its upper circuit for the fifth straight trading session by rising 5% to Rs 133 after the company said its subsidiary won a contract from the information technology (IT) department of Maryland, US.
PNC Infratech jumped as much as 6% to its highest since February 13 after it won an order from National Highways Authority of India to build a six-lane highway in Karnataka.
Globally, Asian stocks witnessed a mixed trend amid weak closing on the Wall Street overnight. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, after inching back in early trade.
Japan's Nikkei closed down 0.2%, while Australian shares ended up 0.3%.
To read the full story, Subscribe Now at just Rs 249 a month