Caution-selling, combined with profit-booking and negative global indices, dragged the Indian equity markets lower on Tuesday.
Consequently, the barometer 30-scrip sensitive index (Sensex) of the BSE closed the day's trade down 379 points, or 1.59 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day's trade in the red. It edged down by 125 points, or 1.73 percent, at 7,109.55 points.
The Sensex, which opened at 23,850.41 points, closed at 23,410.18 points -- down 378.61 points, or 1.59 percent from the previous day's close at 23,788.79 points.
During the intra-day trade, the Sensex touched a high of 23,851.51 points and a low of 23,361.94 points.
The BSE market breadth was heavily tilted towards the bears -- with 1,929 declines and 674 advances.
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Initially, the barometer of the Indian equity markets opened on a positive note, following the recent uptrend and Monday's positive close at the US indices.
However, caution-selling at the start of the Budget session of parliament dragged the equity markets lower.
Profit-booking on the gains made in the past few sessions and a weak rupee dented investor-sentiment.
The Sensex had gained 597 points, while Nifty rose by 186.5 points in the last four consecutive sessions.
Investors' confidence was also eroded by the continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval.
The government is desirous of pushing through major economic legislations like bankruptcy code and Goods and Services Tax (GST) Bill during the ongoing Budget session.
In addition, a weak rupee kept investors unnerved. The rupee closed flat at 68.59 to a US dollar from its previous close of 68.60-61 to a greenback.
On Monday, the rupee weakened by 14 paise to touch its 30-month closing low. This level was last seen during late August 2013.
Besides, softening of crude oil prices and negative global markets deterred investors from chasing stock prices higher.
Moreover, caution prevailed over the upcoming G20 finance ministers' meet in Shanghai, China.
Among sectors, banking stocks recorded major falls, which were sharper than the broader market decline. The sector was impacted by a lowered outlook for three state-owned banks by a ratings agency on Monday.
"Caution over the budget session amidst political tensions and softening of crude oil prices set in a negative bias," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Investors were seen reluctant to chase prices due to the budget session and F&O (future and option) expiry."
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets witnessed profit booking after four consecutive sessions of gains on the back of weak Asian cues.
"With Europe opening in the negative, we saw no respite from the broad based selling with an advance decline ratio of 1:3 on the BSE," Agarwal noted.
"Markets traded in a narrow band over the last few sessions and them to consolidate before making their next move. We expect volatility to increase towards the end of this week in anticipation of the budget."
Furthermore, the foreign institutional investors (FIIs) were net sellers during the day's trade, while the domestic institutional investors (DIIs) bought stocks.
The data with stock exchanges showed that FIIs divested Rs.289.66 crore, while the DIIs bought stocks worth Rs.257.93 crore.
Sector-wise, all 19 indices of the BSE ended the day's trade in the red.
The S&P BSE banking index plunged by 461 points, automobile index lost 239.19 points, capital goods index receded by 203.82 points, healthcare index declined by 170.02 points and oil and gas index edged lower by 158.97 points.
Major Sensex gainers during Tuesday's trade were Asian Paints, up 0.64 percent at Rs.874.50 and ONGC, up 0.02 percent at Rs.214.45.
Major Sensex losers during the day's trade were Coal India, down 4.06 percent at Rs.301.15; State Bank of India (SBI), down 3.94 percent at Rs.158.45; ICICI Bank, down 3.20 percent at Rs.192.10; Bajaj Auto, down 3.19 percent at Rs.2,396.25; and Axis Bank, down 3.02 percent at Rs.385.10.