The BSE Sensex on Monday slumped by 134.26 points to end at nearly two-week low as a proposed bailout of Cyprus rattled global markets and local investors adopted a cautious stance ahead of the Reserve Bank of India's (RBI) monetary policy meeting on Tuesday.
"The Cyprus issue created an initial panic in the Indian markets, which opened gap-down. For rest of the day, markets did recover a bit but remained on tenterhooks," said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.
The 30-share index of the Bombay Stock Exchange (BSE) resumed sharply lower and moved in a narrow range in negative terrain throughout the day to settle at 19,293.20 - a fall of 134.36 points, or 0.69 per cent. Last Friday, it fell by 142.88 points.
The 50-issue National Stock Exchange (NSE) Nifty also dropped by 37.35 points or 0.64 per cent to more-than one-week closing low of 5,835.25.
Shares from metal, PSU, auto, realty and refinery sectors suffered the most while defensive stocks from FMCG and pharma segments attracted some buying support.
Business-friendly Cyprus has treaties on double taxation with many nations, making it attractive for investors.
On March 16, Cyprus got Euro 10 billion package from lenders but planned to impose a one-time levy on money held in island's bank accounts as a part of a sovereign bailout.
Brokers said funds also turned cautious and investors offloaded part of their positions before the RBI policy meeting on Tuesday.
ICICI Bank dropped by 1.50 per cent, SBI by 0.58 per cent and HDFC Ltd by one per cent. Among other rate-sensitive stocks, DLF fell by 0.84 per cent, Unitech by 3.15 per cent, Maruti Suzuki by 2.98 per cent, Bajaj Auto by 2.06 per cent and Tata Motors by 1.55 per cent.
Globally, Asian stocks closed down with losses between 0.90 per cent and 2.71 per cent after last week's Cyprus bailout prompted uncertainty in global markets.
European markets were also trading lower in early deals. The CAC was down by 1.22 per cent, the DAX by 0.96 per cent and the FTSE by 0.71 per cent.
With inputs from PTI