Foreign investors sold index futures worth Rs. 2,800 crore ($443.13 million) and shares worth Rs. 1,571 crore on Tuesday, signalling unwinding of long positions amid a sell-off in global markets.
The 30-share BSE index Sensex fell 78.64 points to close at 26,908.82 and the NSE index Nifty ended down by 25.25 points at 8,102.10.
Among BSE sectoral indices, metal index fell the most by 1.42 per cent, followed by banking 0.65 per cent, IT 0.49 per cent and TECk 0.36 per cent, while only oil & gas index was up 1.39 per cent, followed by consumer durables 0.27 per cent and PSU 0.07 per cent.
Major Sensex gainers were HUL 3.48%, Reliance 2.31%, NTPC 2.19%, ONGC 1.7% and Maruti 1.25%, while the top five losers were Hindalco 2.8%, ICICI Bank 2.63%, GAIL 2.61%, BHEL 2.47% and ITC 1.96%.
Stocks favoured by overseas investors led the losses. ICICI Bank fell 2.7 per cent, while Tata Motors lost 1.5 per cent.
However, energy stocks gained. Reliance Industries, which lost 4.5 percent in the previous session, rose 2.2 per cent, while Oil and Natural Gas Corp ended 1.5 per cent higher. ONGC fell 5.7 percent on Tuesday.
The NSE index slumped more than 3 per cent in the previous session, posting its biggest daily loss since the rupee crisis in 2013 as a continued slide in oil prices hit emerging markets.
Global sentiment remained weak as collapsing oil prices and worries about the world economy drove skittish investors into the arms of safe-haven sovereign debt.
European stocks opened higher, after Asia just about managed to hold up in positive territory, but nervousness ran deep through all financial markets ahead of euro zone inflation data due later on Wednesday.
The figures are expected to show the first annual fall in consumer prices since 2009, piling pressure on the European Central Bank to launch all-out quantitative easing at its next policy meeting on January 22.
But despite the growing threat of deflation, the ECB may be reluctant to act before Greece’s general election on January 25, a vote which some observers say could hasten the country’s exit from the euro zone if the left-wing Syriza party wins.