Domestic markets on Monday hit over one-week lows with benchmark Sensex falling nearly 61 points to 29,122.27 and Nifty slipping 11.50 points to 8,797.40 on caution ahead of the RBI policy review Tuesday.
Profit-booking in recent outperformers, disappointing earnings from some bluechip companies and mixed global cues also weighed on the stock market sentiment.
The BSE Sensex opened lower at 29,143.63 and dropped further to 28,958.52 on fresh selling on weak Asian cues coupled with fresh foreign capital outflows.
However, the barometer recovered from mid-day losses to end above 29K level to 29,268.13 before ending at 29,122.27, a
net loss of 60.68 points or 0.21%. This is its weakest closing level since 29,006.02 on January 22, 2015. It has now
lost 559.50 points or 1.89% in the two sessions.
"RBI policy is being eyed by participants keeping rate-sensitives under pressure. The tone of RBI governor and views on inflation and further rate cuts are awaited. Also, another setback for markets was weak manufacturing data for month of January," said WealthRays Securities director & CEO Kiran Kumar Kavikondala.
Manufacturing growth slipped to a three-month low in January -- after a two-year high in the previous month -- on slower pace of order flows from domestic and global markets, raising hopes of a rate cut by the RBI.
However, some bankers said RBI governor Raghuram Rajan may go for a status quo and would like to wait for cues from
the Budget presentation on February 28 before undertaking any rate cut.
Data showing that foreign portfolio investors sold shares worth a net Rs 771.55 crore last Friday also affected trading.
Globally, Asian equity markets ended mixed as data showing China's manufacturing sector remaining in a poor state
dampened investor confidence.
Key indices in China, Hong Kong and Japan ended lower by 0.09% to 2.56% while indices in Taiwan South Korea and Singapore moved up by 0.18% to 0.95%.
European markets were trading higher in their early trade as investors eyed Greece's attempts to negotiate a new debt deal with its European partners. Key indices in Germany, France and UK were up by 0.37% to 0.64%.
On domestic markets, Veracity Broking Services, Head of Research, Jignesh Chaudhary said: "Indian equity markets traded weak on Monday for the second consecutive day as investors continued to trade cautiously and booked profits....Investors
at present don't see more upside in the market ahead of RBI credit policy."
Among the 30 Sensex constituents, 17 scrips ended lower while 13 finished higher.
Major laggards include Bharti Airtel (3.54%), Dr Reddy's (3.04%), HUL (2.63%), ICICI Bank (2.60%), ITC (2.17 per cent), Sesa Sterlite (1.76%), Bajaj Auto (1.74%) and Tata Steel (1.66%).
Coal India (1.65%), M&M (1.52%), NTPC (1.25%) and Hero Motocorp (1.22%) also fell.
Among gainers, Axis Bank rose by 4.82%, Hindalco 4.01%, Wipro 3.08%, L&T 1.95%, Gail India 1.70%, Sun Pharma 1.40%, TCS 1.28% and Tata Motors 1.26%.
Capital Goods rose by 1.25%, IT 1.00% and Consumer Durable 0.94 among the S&P BSE sectoral indices.
However, the FMCG index fell by 1.77%, Oil&Gas by 0.54% and Metal by 0.47%.
Small-cap and mid-cap indices rose by 1.13% and 0.56% on fresh buying by retail investors.
As a result, the total market breadth turned positive as 1,672 stock ended in the green, 1,288 closed in the red and
130 ruled steady. Total turnover moved up to Rs 4,201.09 crore from Rs 4,050.15 crore on last Friday.