Markets extend losses as RBI decision looms

Lacklustre PMI data, which showed that India's services activity contracted for the first time in three months in May, also affected participants' risk appetite, brokers said.

Interest rate sensitive realty, banking and auto stocks remained under pressure.

The RBI's Monetary Policy Committee is scheduled to announce the outcome of the second bi-monthly monetary policy meeting of 2018-19 tomorrow.

The BSE Sensex shed 108.68 points to close at 34,903.21, while the broader NSE Nifty dropped 35.35 points to 10,593.15

The 30-share Sensex stayed in the negative terrain for most of the session, touching a low of 34,784.68. It finally finished at 34,903.21, down 108.68 points or 0.31 per cent.

The gauge has now lost 419.17 points in three sessions.

The broader NSE Nifty too dropped by 35.35 points, or 0.33 per cent, to end at 10,593.15, after moving between 10,633.15 and 10,550.90.

Meanwhile, domestic institutional investors (DIIs) sold shares worth a net Rs 712.41 crore, while foreign portfolio investors (FPIs) bought equities to the tune of Rs 2,354.03 crore yesterday, as per provisional data released by the stock exchanges. 

"Consolidation continued as investors turned cautious ahead of RBI monetary policy and rupee is marginally weak due to liquidity constraint. Investors are expecting a status quo on policy rates, but RBI's commentary would be keenly watched. The elevated levels of crude will influence RBI's stance on inflation. 

"Earnings cycle is yet to pick up while the divergence in expectation and actual results could trigger downgrades in FY19 estimates," said Vinod Nair, Head of Research, Geojit Financial Services.

Coal India topped the losers' list in the Sensex pack today, falling 2.36 per cent, followed by Bharti Airtel at 2.16 per cent.

Other major laggards were L&T 1.93 per cent, Dr Reddy's 1.87 per cent, Yes Bank 1.84 per cent, Power Grid 1.69 per cent, Infosys 1.48 per cent, M&M 1.39 per cent, TCS 1.34 per cent, Axis Bank 1.30 per cent, Wipro 1.15 per cent, Sun Pharma 1.01 per cent, Bajaj Auto 0.79 per cent, Adani Ports 0.69 per cent, Asian Paints 0.68 per cent, ICICI Bank 0.56 per cent, NTPC 0.53 per cent, Tata Motors 0.45 per cent and ITC 0.41 per cent.

Reliance Industries was the top gainer, up 0.90 per cent, followed by Tata Steel 0.88 per cent, HDFC Ltd 0.78 per cent, Maruti Suzuki 0.69 per cent, HDFC Bank 0.68 per cent, Hero MotoCorp 0.37 per cent, IndusInd bank 0.24 per cent, Kotak Bank 0.16 per cent and SBI 0.15 per cent.

Among BSE sectoral indices, telecom fell 3.08 per cent, capital goods 1.96 per cent, infrastructure 1.72 per cent, teck 1.58 per cent, IT 1.52 per cent, healthcare 1.40 per cent, consumer durables 1.38 per cent, power 1.32 per cent, realty 1.03 per cent, PSU 0.63 per cent, FMCG 0.53 per cent, metal 0.39 per cent, auto 0.35 per cent and bankex 0.22 per cent.

Oil and gas index ended higher by 0.10 per cent.

Broader markets too witnessed selling pressure, with the small-cap index tanking 2.43 per cent and mid-caps losing 1.20 per cent.

Sugar stocks spurted up to 3.24 per cent in anticipation of the government announcing a bailout package for cash-starved mills to clear dues to farmers.

Dhampur Sugar Mills rose 3.24 per cent, followed by Balrampur Chini Mills (3.14 per cent), Mawana Sugars (2.14 per cent), Uttam Sugar Mills (1.63 per cent), Avadh Sugar & Energy (0.48 per cent) and Bajaj Hindusthan Sugar (0.28 per cent).

Globally, shares in Europe and Asia traded higher following heavy gains in US markets supported by tech stocks.

Asia closed mostly higher. Hong Kong's Hang Seng gained 0.33 per cent, Shanghai Composite Index rose 0.74 per cent and Japan's Nikkei advanced 0.28 per cent. 

In Europe, Frankfurt's DAX rose 0.34 per and France's Paris CAC was up 0.28 per cent. London's FTSE, however, declined 0.19 per cent in early trade.