Profit-booking, coupled with doubts over the central government's ability to push through key economic legislations during parliament's upcoming budget session, dragged the Indian equity markets lower on Tuesday.
The weak exports figures for January and dwindling rupee value also subdued investors' sentiments.
Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day's trade down 362 points or 1.54 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended in the red. It was lower by 115 points or 1.60 percent at 7,048.25 points.
The Sensex, which opened at 23,688.61 points, closed at 23,191.97 points -- down 362.15 points or 1.54 percent from the previous day's close at 23,554.12 points.
During the intra-day trade, the Sensex touched a high of 23,692.08 points and a low of 23,164.54 points.
The BSE market breadth favoured the bears -- with 2,045 declines and only 581 advances.
Initially, both the indices of the Indian equity markets opened on a positive note, in-sync with their Asian peers and Monday's sharp gains.
Besides, a rise in crude oil prices, which climbed to over the $30 a barrel mark (one barrel is equal to 159 litres), led investors to chase stock prices higher.
However, profit-booking on the back of gains made on last Friday and Monday dragged the markets lower.
Moreover, investors' confidence was 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.
The central government is expected to push through major economic legislations like bankruptcy code and Goods and Services Tax (GST) Bill during the upcoming session.
In addition, dwindling exports numbers, a weak rupee and consistent selling by the foreign investors dented the equity markets.
The Indian rupee weakened by 13 paise at the close of the day's trade at 68.37 to a US dollar from its previous close of 68.23-24 to a greenback.
"Rupee came under the pressure today due to heavy demand for US dollars from the foreign institutional investors (FIIs). The demand could be seen as an indication for further sales in equity and bonds by the FIIs," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
On the exports front, macro data released late evening on Monday showed a slump of 13.6 percent in January in dollar terms over the same month a year ago.
"Profit bookings on the back of last two sessions gains and fears over a washout of the upcoming parliamentary session led to the decline in the markets," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that global markets remained mixed with Asian indices moving up on the hopes for more central bank stimulus.
"However, in the domestic markets lack of buying interest and profit booking ahead of crucial budget is likely to keep market range bound in the near term," Agarwal pointed out.
Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets commenced corrective and choppy trading sessions following a day of relief rally.
"Broader markets also resumed corrections ending with losses in excess of two percent. PSU bank index witnessed fresh bouts of selling, dragging it down by six percent," Shankar noted.
Sector-wise, all the 19 indices of the BSE ended in the red.
The healthcare index plunged by 347.58 points, banking index plummet by 346.09 points, automobile index receded by 300.79 points, oil and gas index depreciated by 197.60 points and the consumer durables index dwindled by 185.14 points.
The 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.964.19 crore, while the DIIs' bought stocks worth Rs.590.73 crore.
Major Sensex gainers during Tuesday's trade were Adani Ports, up 4.78 percent at Rs.200.40; NTPC, up 2.24 percent at Rs.127.75; Dr.Reddy's Lab, up 0.16 percent at Rs.2,860.35 and Wipro, up 0.13 percent at Rs.526.60.
Major Sensex losers during the day's trade were State Bank of India (SBI), down 6.49 percent at Rs.156.40; Tata Motors, down 4.88 percent at Rs.301, BHEL, down 4.35 percent at Rs.103.25, Gail, down 3.76 percent at Rs.322.30 and Larsen and Toubro (L&T), down 3.59 percent at Rs.1,107.90.
