Both the key equity indices traded with losses of more than 1.5 per cent each during the late-afternoon session as heavy selling pressure was witnessed in automobile, banking and capital goods stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) dipped by 154.60 points or 1.74 per cent to 8,712.10 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,481.09 points, traded at 28,339.99 points (at 2.45 p.m.) -- down 457.26 points or 1.59 per cent from its previous close at 28,797.25 points.
The Sensex has so far touched a high of 28,481.11 points and a low of 28,251.31 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bears -- with 2,019 declines and 601 advances.
On Friday, both the key Indian indices were dragged lower by profit booking and negative global markets.
The barometer index had edged down 248.03 points or 0.85 per cent, while the NSE Nifty fell by 85.80 points or 0.96 per cent.
Initially on Monday, the benchmark indices opened with heavy losses -- down almost two per cent each -- following negative global cues.
The confidence of global investors was eroded after cues from the US Federal Reserve increased the possibility of a rate hike. The Fed's FOMC (Federal Open Market Committee) will meet on September 20-21.
A hike in US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
It is also expected to dent business margins as access to capital from the US will become expensive.
In addition, caution ahead of the release of major macro-economic data -- the Index of Industrial Production (IIP) for July and inflation figures for August -- later during the day, weighed heavy on the indices.
Moreover, lower global crude oil prices and depreciation in the Indian rupee also added to the downward trajectory.
"Increased potential of a US rate hike dragged global markets lower. The Indian equity markets too opened on a negative note," Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.
"Lower crude oil prices and depreciation in the rupee also dented the Indian equity markets."
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, while the CNX Nifty faced selling pressure tracking bearish global cues, the Bank Nifty also traded down on selling pressure.
"IT sector held on to initial gains, while banking, auto and pharma stocks faced continuous selling pressure unable to witness any recovery," Desai said.
"Textile and FMCG (fast moving consumer goods) stocks traded with sideways to bearish sentiments. Aviation stocks traded with sideways sentiments on profit booking at higher levels. Power and oil-gas sector stocks faced selling pressure due to overall negative equity markets."
Desai further added that firm USD/INR futures prices have also pressurised the Nifty price movement.
