Benchmark indices Sensex and Nifty Tuesday retreated from their record highs and closed lower as investors booked profit in recent outperformers like auto and IT stocks ahead of the RBI monetary policy outcome.
In spite of selling pressure across the board due to higher valuation of stocks, both Sensex and Nifty managed to close above the crucial 40,000 and 12,000 levels, respectively.
The BSE Sensex closed 184.08 points, or 0.46 per cent, lower at 40,083.54; while the NSE Nifty edged 66.90 points, or 0.55 per cent, down at 12,021.65.
Top losers in the Sensex pack were Hero MotoCorp, HCL Tech, TCS, Asian Paints, IndusInd Bank and Infosys, shedding up to 3.08 per cent.
On the other hand, Yes Bank, NTPC and Axis Bank emerged as major gainers, rising up to 2.71 per cent.
Of the 30 Sensex constituents, 17 stocks ended with losses and 13 with gains.
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Sectorally, BSE IT was the biggest loser with 1.63 per cent decline. Other major laggards were by teck (1.5 per cent), healthcare (0.99 per cent) and oil and gas (0.84 per cent).
Overall, market breadth was tilted in favour of sellers as 1,453 stocks fell and 1,109 advanced.
In the previous session on Monday, benchmarks Sensex and Nifty had marked their all-time intra-day record as well as closing highs.
Analysts said that investors booked profits at higher levels after markets soared to record highs on Monday amid expectations of an interest rate cut by the RBI on Thursday, especially after a disappointing GDP print for the March quarter.
Auto and IT counters mainly came under a heavy selling pressure due to profit-booking as stocks of both sectors had risen in the previous session on hopes of an RBI rate cut and rupee's sustained rise.
"While globally equities saw a pullback especially in European markets and US futures indicating positive start, Indian markets ended in red ahead of monetary policy. This seems to be a consequence of significant outperformance in Indians equities over global markets in last few days," Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management, said.
The Indian rupee was marginally lower at 69.28 against the US dollar.
Meanwhile, other Asian bourses ended on a negative note, while Europe was trading in the green in opening deals.
Brent crude futures, the global oil benchmark, fell 1.53 per cent to 60.34 per barrel.
"Markets opened marginally lower, but fell later in the afternoon trade as investors and traders awaited RBI's monetary policy decision amid weak cues from global markets," said Narendra Solanki, Head Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers.
The broader mood of the markets remain dampened with a report that the pre-monsoon rainfall in the country was the second lowest in 65 years, he said adding that the three-month pre-monsoon season March, April and May ended with a rainfall deficiency of 25 per cent.
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