The 30-share barometer fell by 144.03 points, or 0.64 per cent to close at 22,484.93. It shuttled between a high of 22,737.31 points and 22,416.24 points during the day. The index had lost 86 points in the previous session.
The market started the day on a high note after IT major Infosys Ltd posted attractive results for the last quarter of FY14. But later the markets tumbled after reports that inflation increased to 5.7 per cent in March from 4.68 per cent in February.
Brokers said selling pressure centred around financial and interest-sensitive stocks on fears RBI may keep interest rates high due to rise in inflation.
They said a weak industrial production data and reports of a lower trend in global markets on slowing China's economic growth further influenced the sentiment.
Markets Top Gainers, Markets Top Losers
The broad-based National Stock Exchange index NSE Nifty lost 43.20 points, or 0.64 per cent to 6,733.10 after touching a high of 6,813.40.
In 30-BSE index components, 20 stocks declined led by State Bank of India, ICICI Bank, HDFC Bank, Axis Bank and Reliance Industries.
Maruti Suzuki, Mahindra and Mahindra, BHEL, Hindalco Ind. and ITC also declined.
Meanwhile, IT shares led by TCS, rose up to 4 per cent, cushioning the market from further fall.
Wipro shares jumped 3.71 per cent while Infosys gained up to 1 per cent. Infosys reported 25 per cent increase in net profit for the quarter ended March 31, 2014.
United Spirits jumped 11.58 per cent to Rs 2,853.15 after liquor major Diageo made an open offer to acquire an additional 26 per cent stake in the company.
Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities
The Sensex lost 144 points in todays trading session led by bearishness in Metal and Bank stocks as Hindalco, Axis Bank, HDFC, Sesa Strelite and Tata Steel fell sharply. On the other hand, TCS and Wipro were notable gainers. For the fourth quarter, Infosys reported PAT of Rs.29920 mn, which was higher than estimates. The company guided for 7-9% growth in USD revenue. WPI inflation came in higher than estimates at 5.7% (a 3 month high), which was taken negatively by the rate sensitive sectors. Going ahead, IT stocks could remain in focus as TCS (on Wednesday) and other frontline IT stocks are scheduled to announce their numbers.
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Indian shares end lower for second straight day
* BSE index closes down 0.64 percent, NSE index ends 0.64 percent lower
* NSE index marks biggest fall since March 3
* Interest sensitive stocks fall on inflation
(Reuters) - India's broader NSE index fell for a second consecutive session on Tuesday, marking its biggest fall since March 3, as interest-rate sensitive shares such as Housing Development Finance Corp fell after wholesale inflation accelerated more than expected.
The wholesale price index (WPI) in March rose a much faster-than-expected 5.70 percent from a year earlier, marking a three-month high and coming well above the 5.30 percent increase forecast by economists.
Concerns that a rally that sent indexes to record highs last week may have been overdone also weighed, especially as Asian shares were hit by data showing China's money supply growing at the weakest pace in more than a decade.
Foreign institutional investors, who have pumped in $4.8 billion so far in 2014, became net sellers worth 3.63 billion rupees ($60.3 million) on Friday for the first time since March 10. Markets were closed on Monday for a holiday.
"With the Nifty seeing a one-sided rally for the last several weeks, investors may continue to book partial profits too. In the coming sessions, fourth quarter results, election outcome and global cues will have a major impact on the market trend," said by Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.
"However, despite selling pressure, Nifty is seen holding above the 6700 level well, which shows optimism in the near term. The index can be seen trading in a compact range of 6650-6820 for the last few trading sessions," he added.
The benchmark BSE index closed 0.64 percent lower at 22,484.93, while the broader NSE index also ended down 0.64 percent at 6,733.10.
Interest rate-sensitive shares such as those of banks and real estate companies fell after the surprisingly strong wholesale price inflation.
These sectors had surged on anticipation the Reserve Bank of India would hold off on further interest rate hikes after tightening monetary policy by 75 basis points since September.
Housing Development Finance Corp. fell 3.39 percent, while DLF Ltd lost 5.8 percent and Unitech closed 2.1 percent lower.
Among banks, State Bank of India ended down 1.5 percent.
Investors took profit across a range of blue chips. Hindalco Industries fell 4.73 percent, while Tata Motors , which had gained 6.3 percent so far this month, was down 2.4 percent.
However, Infosys Ltd rose 0.76 percent after posting a stronger-than-expected 25 percent increase in net profit.
Other IT outsourcing companies also rose, with Tata Consultancy Services gaining 4.1 percent and Wipro closing 3.6 percent higher.
Shares in United Spirits Ltd rose as much as 15 percent to a record high of 2,940.80 rupees after Diageo Plc announced a tender offer to acquire up to an additional 26 percent stake in the Indian firm at 3,030 rupees a share. The offer will be launched in June.
Shares in the spirits maker ended up 11.6 percent.