The S&P BSE Sensex recovered from early losses and was quoted down 31 points in late morning trade on selling in bank, PSU, consumer durable and metal stocks.
Shares fell amid initial volatility after Reserve Bank of India (RBI) Governor Raghuram Rajan said monetary policy should aim at lowering inflation expectations. Sentiment was also hit after the International Monetary Fund forecast India's economic growth would dip to 4.25 per cent in the year ending March 31, 2014.
The Sensex opened lower at 19,918.20 and dropped further to 19,826.96 before quoting at 19,952.18 at 1030hrs, a loss of 31.43 points, or 0.16 per cent, from the previous close. The CNX Nifty on the National Stock Exchange moved down 14.45 points, or 0.24 per cent, to 5,913.95.
The major losers were ICICI Bank (2.45 pc), State Bank of India (1.6 pc), Bharti Airtel (1.43 pc), Maruti Suzuki (1.23 pc), BHEL (1.11 pc), NTPC (1.04 pc) and Coal India (1.01 pc).
Buying was seen in realty, healthcare and FMCG sector stocks.
Among the gainers were Sun Pharma, which rose 1.62 pc, followed by Tata Motors 1.15 pc, Tata Power 0.83 pc and Jindal Steel 0.66 pc.
Foreign institutional investors bought a net Rs 226.32 crore of shares yesterday, according to provisional data from the stock exchanges.
Asian stock markets were mostly lower as the stalemate in Washington increased fears that the world's largest economy may breach the federal debt ceiling.
Key indices in China, Taiwan, Hong Kong and Indonesia fell while indices in Singapore and Japan rose.
