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The Sensex plunged over 240 points in a late sell-off sparked by wobbly European markets and caution a day ahead of the central bank's policy meet.
The Reserve Bank of India is expected cut its key repo rate to a four-year low to help support the domestic economy at a time when consumer inflation is at a record low, but may express caution about easing further as price risks still loom.
The 30-share BSE index Sensex plunged 246.66 points or 0.95 per cent to 25,616.84 and the 50-share NSE index Nifty fell 72.8 points or 0.93 per cent to 7,795.70.
Among BSE sectoral indices, metal index fell the most by 2.6 per cent, followed by auto 1.74 per cent, capital goods 1.72 per cent and TECk 1.37 per cent. On the other hand, consumer durables index was the star-performer and was up 2.87 per cent, followed by realty 1.03 per cent and healthcare 0.12 per cent.
Top five Sensex gainers were Dr Reddy's (5.54%), Lupin (+2.21%), HUL (+1.43%), TCS (+0.83%) and SBIN (+0.73%), while the major losers were Tata Motors (-6.06%), VEDL (-4.4%), Sun Pharma (-3.42%), Infosys (-2.91%) and Coal India (-2.81%).
A Reuters poll last week showed 45 of 51 economists expect the RBI to cut the repo rate by 25 basis points to 7.00 per cent, its lowest since May 2011.
"There should be a 25 basis point cut in interest rate and markets may react positively to it," said Taher Badshah, senior Vice-President & co-head equities at Motilal Oswal Asset Management Co.
"Market should remain sideways though in the near term due to Bihar (state) elections and upcoming results season."
Global markets
European shares dipped lower on Monday, although Vodafone lagged after ending talks with Liberty Global and carmaker Volkswagen, which has been hit by an emissions data scandal, also declined.
The pan-European FTSEurofirst 300 index was down 0.1 per cent, while the euro zone's blue-chip Euro STOXX 50 index fell 0.3 per cent, with both markets retreating after rising by around 3 per cent on Friday.
Asian stocks sagged on Monday after Wall Street’s uninspiring Friday performance and ahead of key economic indicators, while the dollar consolidated its gains against the yen and euro.
MSCI’s broadest index of Asia-Pacific shares outside Japan stood virtually flat. Shanghai shares fell 0.3 per cent. Financial markets in South Korea, Hong Kong and Taiwan were closed Monday for public holidays.
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