Indian equity markets were dragged lower on Tuesday by profit booking, coupled with negative global cues and caution ahead of major global financial events.
Both the key indices traded in the red during the mid-afternoon trade session, as heavy selling pressure was witnessed in automobile, banking and IT stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged down 36.85 points or 0.42 per cent, to 8,771.55 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,690.66 points, traded at 28,520.86 points (at 1 pm)—down 113.64 points or 0.40 per cent from the previous close at 28,634.50 points.
The Sensex has so far touched a high of 28,698.81 points and a low of 28,502.86 points during the intra-day trade.
The BSE market breadth was tilted in favour of the bears—with 1,414 declines and 1,076 advances.
On Monday, the benchmark indices had ended on a flat-to-positive note, as fresh foreign fund inflows, higher crude oil prices and value buying kept the sentiments buoyed.
The barometer index had risen by 35.47 points or 0.12 per cent, while the NSE Nifty edged up by 28.55 points or 0.33 per cent.
Initially on Tuesday, the benchmark indices opened on a flat-to-negative note following negative global cues.
Besides, investors were cautious ahead of the US Fed's Federal Open Market Committee meet and the Bank of Japan (BoJ) monetary policy review announcements.
A rate-hike can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India, and is also expected to dent business margins as access to capital from the US will become expensive.
Moreover, profit booking at higher levels led the key indices to cap gains.
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the CNX Nifty faced profit booking and traded down.
"IT and banking stocks traded with mixed sentiments. Auto and textile stocks faced profit booking at higher levels," Desai said.
"Aviation stocks traded with sideways sentiments due to lack of buying interest from traders. FMCG stocks traded down due to selling pressure, whereas cement and power sector stocks traded with mixed sentiments due to profit booking."
Desai added that the USD/INR futures traded with sideways to firm sentiments, pressurising the price movement of Nifty at higher levels.