The benchmark Bombay Stock Exchange (BSE) Sensex on Monday fell about 29 points in volatile trade as participants adopted a cautious stance ahead of the Reserve Bank of India's (RBI) monetary policy review on Tuesday.
Profit-booking and a weakening rupee, which depreciated 47 paise against the dollar to 61.58 intra-day, also weighed on the trading sentiment, stock brokers said.
The 30-share BSE barometer after commencing on a higher note, continued to rise and touched intra-day high of 26,715.77.
However, off-loading of positions by participants and profit-booking in select counters pushed the Sensex back to close at 26,597.11, down 29.21 points (or 0.11 per cent). Intra-day, it had touched the day's low of 26,518.01.
The BSE index gained 157.96 points on Friday after Standard & Poor's (S&P) raised India's outlook to stable from negative.
Amon the 30 Sensex scrips, 21 closed with losses, while nine others ended higher. Interest rate sensitive stocks such as ICICI Bank, HDFC Bank, HDFC and Axis Bank edged lower ahead of the RBI policy outcome.
On similar lines, the broader 50-issue Nifty of the National Stock Exchange (NSE), after moving both ways, ended 9.95 points (or 0.12 per cent) down at 7,958.90. It shuttled between 7,991.75 and 7,934.70 intra-day.
Sentiments turned weak as funds and investors were seen trimming their positions ahead of the monetary policy review by the central bank on Tuesday.
The weakness in rupee against US dollar, helped IT stocks close in the positive zone. Shares of TCS surged 3.17 per cent, Wipro ended 1.18 per cent higher and Infosys gained 1.90 per cent.
Overall trading was tepid in this holiday-shortened week ahead as markets will remain closed on Thursday and Friday for Mahatma Gandhi Jayanti and Dussehra respectively.
Major losers, which dragged down the indices were Bajaj Auto, Coal India (CIL), Dr Reddy, Hero Moto Corp, Maruti Suzuki, ONGC, Sesa Sterlite, Tata Motors, Tata Power and Tata Steel.
Sectorally, the BSE Metal sector index suffered the most by plunging 1.11 per cent, followed by FMCG index (0.92 per cent), Banking index (0.91 per cent), Auto index (0.44 per cent), Oil & Gas (0.37 per cent), Realty index (0.25 per cent) and Capital Goods index (0.24 per cent).
Asian stocks ended mixed. European markets were weak in early trade as a measure of euro-area economic confidence declined.
Meanwhile, provisional data showed that Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 1,133.64 crore last Friday.
Barring China and Japan, other Asian markets closed with losses while European stocks too were trading weak in their late morning deals.
Among major losers, Sesa Sterlite was fell most to end 1.65 per cent down, followed by Tata Steel (1.61 per cent), Coal India (1.48 per cent), ITC (1.44 per cent), Bajaj Auto (1.42 per cent), ICICI Bank (1.39 per cent), ONGC (1.13 per cent), Hero MotorCorp (1.12 per cent), Axia Bank (0.90 per cent) and Maruti Suzuki (0.88 per cent).
Other major gainers were Sun Pharma (3.36 per cent), GAIL (2.36 per cent), Hindalco (1.33 per cent), Wipro (1.18 per cent) and BHEL (0.78 per cent).
Among BSE S&P sectoral indices, the Metal index dipped by 1.11 per cent, FMCG by 0.92 per cent, Bankex by 0.91 per cent and Auto by 0.44 per cent, while Healthcare firmed up by 2.21 per cent, IT by 1.81 per cent, Consumer Durables by 1.79 per cent and Teck by 1.50 per cent.
Although the Sensex ended in the red, reflecting rally in second-line stocks, the total market breadth remained positive as 1,855 stocks settled with gains while 1,087 finished with losses.
The BSE Small-cap and BSE Mid-cap indices closed up by 1.49 per cent and 1.01 per cent, outperforming the Sensex.