Benchmark share indices ended lower for the second straight session Wednesday dragged by bank shares on worries non-performing assets may rise on the back of a slowing economy and Reliance Industries on concerns of lower gas output from KG-D6 gas field.
The Sensex ended down 146 points at 15,728.
Nifty ended down 45 points at 4,705.
Markets are likely to remain volatile tomorrow as traders roll over their positions ahead of the futures & options expiry.
Foreign Institutional Investors bought shares worth Rs 214.31 crore on Tuesday as per provisional data from the stock exchanges.
Markets will be looking at the next batch of corporate earnings, which starts in January, for direction.
Speaking about the rollover positions till now, Shshank Mehta, Derivatives Strategist, Shah Investor's Home said, "We observe below average rollovers this expiry relative to earlier expiries.
"However, December month generally observes anomally due to the year-end NAV buying sentiment.
"I can comment on some the T-3 and T-2 above average rolleovers; however, it would be prudent to form a view or take trading positions only actual rollovers on expiry.
"For example, we formed bias in Reliance and observed long rolls in T-3 and T-2 positions and we would have come to that conclusion if would have traded and settled above 773 (settlement at Nov'11 expiry).
"However, with a fall in the market today and correspoding change in derivatives data points we believe Nifty and heavy weight stocks such as Reliance may drift lower changing our opnion.
Bottomline is reading into T-3/-2/-1 tolovers is important as it increases our convistion. But final judgement should be placed only on actual rolls on expiry".
Asian peers performed weakly with Seoul Composite dropping 1% to 1,825. Nikkei shed 0.2% to 8,423 ahead of a Italian bond sale later this week.
All the sectoral indices, barring the power and consumer durables indices, dropped into the negative zone. Rate sensitive bankex dropped 2% to 9,303. BSE metal index was the biggest loser - down 2% at 9,334.
SBI slipped 2% at Rs 1,610. The bank will raise term deposit rates for non-resident external accounts by up to 574 basis points from 1 January 2012.
Other banking names shed with ICICI Bank down 3.8% at Rs 697. The stock was the largest dragger among Sensex stocks followed by Reliance which was down 2% at Rs 739.
PSU OMCs slipped as oil prices loomed higher. HPCL shed 2.7%, BPCL was down 1.7% and IOC slipped 3% in trades.
Crude oil futures traded near six-week high after Iran threatened to block crude transportation through the Strait of Hormuz, sparking oil supply concerns.
Jindal Steel tumbled 7% to Rs 455. Hindalco and Sterlite from the metal space slipped 2-3% each. Mahindra & Mahindra, Wipro, ITC and DLF were the other major losers.
Meanwhile, NTPC added 2.6% at Rs 161. Tata Power added 1.6% to Rs 92 after it decided to buy out BP's stake in solar JV.
Varun Industries dropped 1% to Rs 231 on reports that it plans to sell 51 per cent stake in an onshore oil block in Madagascar to Petro China subsidiary for 150 million dollars.
Adani Power has put on hold its capacity expansion plans due to lack of clarity on coal supplies.
The stock touched a new low in trades today and ended down 7.5% at Rs 62.
From the airline space, Jet Airways slipped 2.2% on reports that its chairman has got notices from the I-T department for evading taxes.
Among other stocks, Kingfisher Airlines dropped 3.5% and Spice Jet was down 1.8%.
BSE market breadth was negative.