Negative global trends, coupled with the upcoming third-quarter results and macro-economic data depressed the Indian equity markets during the mid-afternoon trade session on Monday.
This resulted in the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) to plunge 132 points.
Initially, both the bellwether indices opened on a negative note in sync with their Asian peers and last week's massive falls.
Asian markets were trading deep in the red after Chinese stocks receded by 5 percent.
However, the bellwether indices pared their losses as investors were attracted by a sizeable number of stocks that were trading at their yearly lows.
Apart from value buying, short covering amidst thin volumes led the morning relief rally before markets resumed correction.
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In addition, investors were hopeful for a better third quarter (Q3) results by India Inc on the back of an economic recovery and low commodity prices.
The Q3 earnings results will start coming out from January 12.
Notwithstanding, gains were soon capped by the long-liquidation positions and Friday's US-based data which showed a strengthening jobs market. The data indicated at a potential future rate hike.
Another rate hike by the US Fed will lead away more FPIs (foreign portfolio investors) from emerging markets such as India, denting the equity and currency markets.
Besides, caution prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday.
The barometer S&P BSE Sensex was trading 132 points, or 0.53 percent down.
Similarly, the wider NSE Nifty was trade in the red. It was lower by 46.75 points, or 0.62 percent at 7,554.60 points.
The Sensex of the S&P BSE, which opened at 24,787.11 points, was trading at 24,801.98 points (1.50 p.m.) -- down 132.35 points, or 0.53 percent from the previous day's close at 24,934.33 points.
The Sensex has so far touched a high of 24,840.17 points and a low of 24,598.90 points in intra-day trade.
The S&P BSE market breadth favoured the bears -- with 1,585 declines and 1,068 advances.
The Sensex had closed the previous session on January 8, with a staggering fall of 1,226.57 points or 4.68 percent, while the Nifty was lower by 361.85 points, or 4.54 percent.
The rout even drowned the scrips of 123 companies to their 52-week lows since the start of 2016.
"The slide in the Chinese markets, last weeks falls and some profit bookings made on the Friday's relief rally capped the gains," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Investors were seen reluctant to chase prices higher due to the upcoming inflation data and prevailing global uncertainties."
Nitasha Shankar, vice president for research with YES Securities, elaborated that global markets continued to see selling pressure leading to weakness in Indian markets.
"Broader markets are also declining in line with the headline index. All major sectorial indices are trading in the red barring the auto index," Shankar noted.
"PSU (public sector undertaking) banks continue to bleed with deep cuts of 2 percent."