The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) touched its lowest levels since October last year and ended in the red during the trade session on Tuesday.
It closed the day's trade 42 points or 0.16 percent down. This is the sixth straight session of the losses at the index.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed the day's trade in the negative zone. It ended 21.75 points or 0.27 percent down at 8,022.40 points.
The Sensex of the S&P BSE, which opened at 26,510.29 points, closed the day's trade at 26,481.25 points, down 41.84 points or 0.16 percent from the previous day's close at 26,523.09 points.
The Sensex touched a high of 26,604.65 points and a low of 26,446.50 points during the intra-day trade.
According to the analysts, concerns of a possible rate hike in the US and Greece debt crisis effected market sentiments negatively.
"While Nifty opened on a negative note for the seventh straight day, banking stocks pushed higher as RBI (Reserve Bank of India) approved 'strategic debt restructuring' empowering banks to take control, if the borrower defaults," said Anand James, co-head for technical research desk, Geojit BNP Paribas.
James elaborated that the possibilities of MSCI (Morgan Stanley Capital International), including China's 'A' shares in MSCI EM (emerging markets) index, also weighed on the sentiments.
There is a possibility that India's weightage in the index may be reduced as a result of the entry of Chinese stocks and thus effect capital flows.
"China continued to remain in the headlines as data showed that factory prices sank in May, extending the decline for several consecutive months, improving chances of a stimulus," James added.
Gaurav Jain, director, Hem Securities, said: "Markets continue its southward journey in line with the foreign portfolio investor sell-off."
On Monday, the foreign institutional investors (FIIs) turned into net sellers in the cash market segment. They sold shares worth Rs.749.12 crore.
On the other hand, the DIIs (domestic institutional investors) were net buyers on Monday. They bought shares worth Rs.529.82 crore in the capital markets segment.
During Tuesday's trade session, heavy selling was observed in the healthcare, automobile, information technology (IT), capital goods and technology, entertainment and media (TECK) sectors.
However, healthy buying was seen in the consumer durables, metal and banking stocks.
The S&P BSE healthcare index receded by 222.38 points, followed by automobile index which declined by 131.34 points, IT index decreased by 74.94 points, capital goods index fell by 58.18 points and the TECK index was down by 39.14 points.
The S&P BSE consumer durables index gained by 97.23 points, metals index rose by 75.55 points and banking index was up by 47.66 points.
The major Sensex gainers on Tuesday were: Vedanta, up 3.11 percent at Rs.182.55; Hindalco Inds, up 1.57 percent at Rs.119.90; ICICI Bank, up 1.36 percent at Rs.287.10; GAIL, up 1.30 percent at Rs.391; and Tata Motors, up 1.06 percent at Rs.440.30.
The major losers were: Cipla, down 3.35 percent at Rs.593.50; Dr. Reddy's Lab, down 2.34 percent at Rs.3,329.25; Sun Pharma, down 2.05 percent at Rs.812.75; Wipro, down 1.76 percent at Rs.543.75; and Bajaj Auto, down 1.60 percent at Rs.2,185.85.
Among the Asian markets, Japan's Nikkei closed lower by 1.76 percent. China's Shanghai Composite Index fell by 0.36 percent. Hong Kong's Hang Seng declined by 1.20 percent.
In Europe, London's FTSE 100 was lower by 0.34 percent. France's CAC 40 fell by 0.61 percent, Germany's DAX Index was down by 1.23 percent at the closing bell here.
