The investor sentiments turning bearish a day ahead of the fourth bi-monthly monetary policy review of the Reserve Bank of India (RBI), a barometer index of Indian equities closed 246 points down on Monday.
The markets were dragged down by the uncertainty over the RBI's rate cut decision. The apex bank will conduct its fourth bi-monthly monetary policy review on September 29.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) closed on Thursday (Sep 24) with a gain of only 39 points or 0.15 per cent. On Friday, the Indian markets remained closed on account of Eid-ul-Zuha.
The Indian equity markets opened on a lower note on Monday, following a sharp downward revision of Chinese industrial profits.
On Monday, the S&P BSE Sensex, which opened at 25,922.71 points, closed at 25,616.84 points - 246.66 points or 0.95 per cent down from the previous day's close at 25,863.50 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) too closed in the red. It shed 72.80 points or 0.93 per cent at 7,795.70 points.
Observers pointed out that negative Asian market cues coupled with anxiety over the upcoming monetary policy review subdued Indian markets.
"Chinese data showing that industrial profits declined steeply did give a negative opening to Indian markets, but the Chinese story drew no surprises," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Nitasha Shankar, vice president of research with YES Securities, said, "Market participants preferred to maintain light trading positions in the run-up to the RBI policy meet."
Sector-wise, automobile, capital goods, metal, information technology (IT) and banking stocks came under heavy selling pressure.
However, consumer durables, healthcare and realty sectors supported the markets.