Stock markets had opened on a better note with the 30-scrip BSE Sensex touching a high of 25,197.50 points in early trade on positive cues from other Asian markets.
However, it dipped below 25,000 mark for the first time since June 5 to touch day's low of 24,878.66 points on heavy selling. Some recovery in the fag-end helped Sensex narrow losses as ONGC, BHEL, Hero Motocorp and M&M shares gained.
The barometer closed with a loss of 74.19 points, or 0.30 per cent, to end at 25,031.32. The gauge has now lost over 489 points in the four sessions. Today's closing value is the lowest since 25,019.51 on June 5.
The 50-share Nifty of the NSE ended 18.10 points, or 0.24 per cent, down at 7,493.35 after shuttling between 7,534.80 and 7,441.60.
Scrips of Sensex heavyweight ITC tanked 6.5 per cent- its biggest single session fall since September 2013- reacting to reports there is a proposal to hike excise duty on cigarettes of all lengths. Godfrey Phillip and VST Industries slipped.
"We believe that, as proposed, if such a steep hike in excise duty is taken, cigarette volume growth for both ITC and VST Industries could witness a significant blow, impacting their revenues and margins," said brokerage ICICIdirect.com.
The FMCG sector index suffered the most by falling 4.06 per cent, followed by IT index that dropped 1.56 per cent after Infosys shares fell 2.55 per cent.
Sugar stocks clocked gains of up to 11 per cent after government decided to provide additional interest-free loan of up to Rs 4,400 crore to sugar mills and hike import duty.
"It was in the last half an hour session that some recovery was seen, taking the Nifty near 7,500 level. Sensex too managed to close at 25,000 level," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
Oil prices edged higher in Asia on continued violence in Iraq, but gains were capped. The West Texas Intermediate was up 39 cents to USD 107.22, while Brent crude gained 39 cents to USD 115.20 in afternoon trade.
Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities: The Sensex traded in the negative zone today only to partly recover in the latter part of the day. The fall in the markets was led by global cues as well as ITC which closed down 6% on back of news-reports that the government is contemplating a steep hike in excise duty on cigarrates. During the day, the government announced that the Union Budget would be presented on 10th july. From hereon, the markets would be looking forward to the union budget and its likely measure at invigorating growth, reducing inflation and correcting the fiscal deficit.
Indian shares inch down; ITC slumps most in about 10 months
(Reuters) Indian shares fell for a fourth straight session on Monday, marking their lowest close in 2-1/2 weeks as ITC Ltd slumped the most in ten months on tax worries, while concerns over high oil prices feeding inflation continued to weigh.
Brent crude was up at around $115 a barrel on Monday, supported by worries about potential disruptions to supply from Iraq where Sunni insurgents took control of strongholds along the border with Syria at the weekend.
Falls also tracked European stocks after euro zone business activity data showed growth slowing, with France a notable laggard, in contrast with upbeat numbers from China.
Also, overseas investors sold Indian shares worth 2.20 billion rupees ($36.85 million) on Friday, provisional exchange data showed.
Investors also turned cautious ahead of the new government's budget on July 10, which will hold details of the borrowing plan for 2014/15.
"There is an uncertainty and people are waiting for budget for clarity on major policy issues. However, market is optimistic and is expecting some real good measures. That is why we are not seeing any heavy selling," said Suresh Parmar, head, institutional equities at KJMC Capital Markets
The benchmark BSE index lost 0.3 percent, or 74.19 points, to end at 25,031.32.
The broader NSE index fell 0.24 percent, or 18.10 points, to end at 7,493.35, closing below the psychologically important 7,500 level.
Both indexes marked their lowest close since June 5.
India's biggest cigarette manufacturer ITC slumped 6.2 percent, its biggest single-day fall since Sept. 3, 2013, on a media report that government may raise taxes on cigarettes aggressively in the upcoming budget, dealers said.
Kotak Mahindra Bank fell 3.8 percent while Infosys lost 2.5 percent.
Among other blue-chips, United Spirits fell 3.2 percent while Hindustan Unilever ended down 1.1 percent. UltraTech Cement fell 0.6 percent after the government on Friday pushed through a steep 6.5 percent hike in rail freight effective June 25.
However, sugar refiners gained after the food minister said on Monday that India would raise import duty on sugar to 40 percent from 15 percent, as the government tries to revive business at mills that owe farmers around $1.84 billion.
Bajaj Hindusthan Ltd surged 9.9 percent, Dhampur Sugar Mills Ltd advanced 8.2 percent, Shree Renuka Sugars Ltd rose 10.3 percent, and Balrampur Chini Mills Ltd gained 6.9 percent.
Essar Oil Ltd rose 5 percent and AstraZeneca Pharma India Ltd gained 1.9 percent on plans of delisting the companies from Indian exchanges.
* BSE index falls 0.3 pct; NSE ends 0.24 pct lower
* Sugar refiners gain as govt plans to raise import duty
* Essar Oil, AstraZeneca surge on delisting plans
FACTORS TO WATCH
* Aussie, Kiwi up after China survey
* Brent crude up near $115 on Iraq supply worries
* Gloomy French data hits European stocks
* Foreign institutional investor flows