Sensex and Nifty fell for the second straight session on Thursday in line with global markets, as a dovish stance by the US Federal Reserve warned the coronavirus pandemic might threaten the modest economic recovery.
In afternoon session, European stocks fell after Germany said its economy shrank by 10% in the second quarter from the previous three-month period. A record 50,000 Coronavirus cases in the last 24 hours in India on Thursday also led to negative sentiment among investors.
Sensex which rose 300 points initially erased all gains to close in the red.
While Sensex ended 335.06 points or 0.88 per cent lower at 37,736.07, NSE Nifty tumbled 100.70 points or 0.90 per cent to end at 11,102.15.
IndusInd Bank was the top loser on Sensex, tumbling 5.62 per cent, followed by HDFC, Axis Bank, PowerGrid, SBI, Bajaj Finserv and Bharti Airtel. On the other hand, Sun Pharma, Maruti, Infosys and Reliance Industries were among the gainers, climbing as much as 3.44 per cent.
Markets also turned choppy on the expiry of July derivatives and a weak trend in the rupee, traders said.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan said, "Nifty started the day on a positive note. However, it couldn't stretch beyond 11,300. The bears took control thereon & dragged the index significantly down. Today's decline can be attributed as a follow through of the bearish outside bar formation on July 29. On the downside, the Nifty found support at a crucial rising trendline. So the index is still within the range of 11050-11350. The bears, however, are gearing up to break the lower end of the range. Once the support zone of 11050-11000 breaks, the index will be set for a significant correction."
BSE telecom, oil and gas, finance, bankex, utilities and power indices fell up to 2.25 per cent, Broader BSE mid-cap and small-cap indices fell 0.38% and 0.43 per cent, respectively.
"Unlock 3.0 failed to enthuse, as earnings results took priority and markets turned volatile in the expiry session. Financials led the losses for the benchmark index," said Vinod Nair, Head of Research at Geojit Financial Services.
Banking stocks led the losses with BSE bankex ending 440 points lower at 24,626. Oil and gas index on BSE too slumped 300 points to 13,274. On the other hand, healthcare, IT and teck stocks capped losses. Bank Nifty lost 1.95% or 429 points to 21,646.
Of 30 Sensex stocks, 22 ended higher.
Market breadth was negative with 1023 shares ending higher against 1631 falling into the red.
In the forex market, the rupee fell 4 paise to close at 74.84 against the US dollar.
COVID-19 cases in India crossed the 50,000 mark in a single day for the first time, pushing the virus tally to 15,83,792, while the recoveries went past 10 lakh on Thursday, according to Health Ministry data.
The death toll climbed to 34,968 with 775 people succumbing to the disease in a day.
Globally, the number of COVID-19 cases has crossed 1.68 crore, with more than 6.61 lakh fatalities.
US President Donald Trump said on Wednesday his administration and Democrats in Congress were still "far apart" on a new coronavirus relief bill which led the global markets lower in trade today.
Senate Republican leaders on Monday rolled out a $1 trillion package of proposals, which Democrats rejected as inadequate.
In Europe, Frankfurt's DAX retreated 2.4% to 12,511 after the GDP figures came in below expectations. In Asia, the Shanghai Composite Index lost 0.2% to 3,286.82 and the Nikkei 225 in Tokyo gave up 0.3% to 22,339.23.
The Hang Seng in Hong Kong tumbled 0.07% to 24,710.59 after data Wednesday showed the territory's economy shrank by 9% in the quarter ending in June.
The Kospi in Seoul advanced 0.2% to 2,267.01 and Sydney's S&P-ASX 200 added 0.7% to 6,051.10. Global oil benchmark Brent crude was trading 1.27 per cent lower at $43.53 per barrel.