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Markets ended lower for the fourth straight session, amid weak Asian cues, after sharp contraction in December services PMI dashed hopes of a recovery in the second half of the year.
The 30-share Sensex ended down 57 points at 20,795 and the 50-share Nifty ended down 20 points at 6,192.
The rupee came off its day's lows of Rs 62.45 to the dollar on report that the RBI has intervened and bought a small quantity of dollars. The Indian currency was trading at 62.35 compared with Friday's close of Rs 62.16.
The Purchasing Managers' Index (PMI) for services went down sharply to 46.7 points in December from 47.2 points in November. A PMI reading above 50 signals expansion in the sector and below 50 shows contraction. Services PMI has now stayed below the 50 mark for the sixth straight month.
The PMI services in the third quarter of 2013-14 stood at 47 points compared to 46.7 points in the previous quarter. The government and policy makers had pinned their hopes of a recovery in the Indian economy in the second half of the year.
Asian stocks ended down tracking China's weak December services PMI. Shares in Japan witnessed profit taking after recent gains while a stronger yen also dampened sentiment. According to a survey by China's National Bureau of Statistics growth in the services sector slipped to a four-month low of 54.6 in December compared with 56.0 in November.The Nikkei ended down 2.4%, the Shanghai Composite slipped 1.8%, Hang Seng closed 0.6% lower and Straits Times ended 0.2% lower.European shares remained volatile in a narrow range as investors remain cautious ahead of key economic data from the euro zone and minutes of the US Fed meeting later this week. The DAX, and FTSE-100 were up marginally up while CAC-40 was down 0.2%.
The BSE Bankex was the top loser among the sectoral indices down 1.1% followed by Realty, IT and Power indices.
Bank shares were down after fall in December services PMI raised concerns of economic growth revival. ICICI Bank, HDFC Bank, SBI and Axis Bank ended down 0.2-2.5% each.
Among the index heayweights Infosys ended down 1.4% ahead of its second quarter earnings due for release on Friday and Reliance Industries closed 1.2% lower.
Oil and Natural Gas Corp closed 1.9% higher after the company said it will invest around $9 billion in bringing to production an array of oil and gas discoveries in its prolific Krishna-Godavari basin block off the east coast by 2017-18.
Tata Motors also rebounded today after the recent correction following dismal December sales. The stock ended up 1.1%. Last week, the auto major reported 42.28% decline in its total vehicle sales at 37,852 units in December 2013.
Among other shares, RPP Infra Projects ended locked in upper circuit of 20% at Rs 60.40 after the company said it has won contracts from Tamil Nadu Civil Supplies Corporation (TNCSC) and Mangalore Special Economic Zone (MSEZ).
Shares of Tata Power and Reliance Infrastructure ended down 0.4-2.6%on media reports that the State of Maharashtra may announce reduction power tariff.
Ind-Swift gained 5% to end at Rs 8.50 extending its Friday's 1% gain after the company board approved the allotment of 41.68 lakh equity shares at Rs 17.50 per share to promoters group on preferential basis.
JSW Steel gained 4% to end at Rs 1,035 after the company said that Raigad Unit of Heidelberg Cement India has been transferred to the company with effect from the end of business hours on January 3, 2014.
Shares media companies were in demand and ended higher by up to 7% in otherwise weak market on hopes that the year 2014 turn to be a good year for the entire sector including television, radio, digital and print media. Entertainment Network (India), TV18 Broadcast, Network18 Media and Investments, TV Today Network and NDTV ended 4-8% up.
In the broader market, the BSE Mid-cap index ended up 0.4% and the Small-cap index gained nearly 1%.
Market breadth ended positive with 1,478 gainers and 1,035 losers on the BSE.
