Equity indices frittered away a good start to close with modest losses on Monday, pressured by heavy selling in metal stocks after the government imposed export duties on steel-making raw materials to curb soaring prices.
The 30-share BSE Sensex opened strong and gained momentum as the session progressed, but came under severe selling pressure in afternoon trade to close 37.78 points or 0.07 per cent lower at 54,288.61.
On similar lines, the broader NSE Nifty slipped 51.45 points or 0.32 per cent to end at 16,214.70.
Metal stocks took a knock after the government on Saturday hiked the tax on export of iron ores and concentrates to 50 per cent, and imposed a duty of 45 per cent on iron pellets in a bid to increase their domestic availability and curb soaring steel prices.
Tata Steel was the biggest loser in the Sensex pack, plummeting 12.53 per cent, followed by UltraTech Cement, ITC, PowerGrid, HDFC, HDFC Bank, HCL Tech and Reliance Industries.
In contrast, M&M, Maruti, HUL, Larsen & Toubro, Asian Paints, Kotak Mahindra Bank and Wipro were among the gainers, climbing as much as 4.14 per cent.
"Nifty once again gave up the intra day gains and ended in the negative.
"Metals stocks sold off post the levy of export duties over the weekend on iron ore and some steel intermediates," said Deepak Jasani, Head of Retail Research, HDFC Securities.
"After a firm start, markets failed to hold on to their early upsurge and simply lost track to end marginally lower. Metal stocks bore the brunt...," said Shrikant Chouhan, head of Equity Research (Retail), Kotak Securities Ltd.
Among BSE sectoral indices, metal plunged 8.33 per cent, followed by basic materials (4.08 per cent), oil and gas (1.74 per cent) and energy (1.47 per cent).
In contrast, auto jumped 1.90 per cent, capital goods 0.91 per cent, IT 0.79 per cent and consumer discretionary goods and services 0.78 per cent.
In the broader market, the BSE smallcap declined 0.64 per cent and midcap slipped 0.26 per cent.
Global stocks were mixed, with Asian markets in Shanghai, Seoul and Tokyo ending higher, while Hong Kong settled in the red.
Equity exchanges in Europe were trading mostly higher in the afternoon session.
International oil benchmark Brent crude gained 1.15 per cent to $113.8 per barrel.
Rupee recovered from record lows and settled 15 paise higher at 77.55 (provisional) against the US dollar on Monday, supported by a weak greenback overseas.
Continuing their selling spree, foreign institutional investors offloaded shares worth Rs 1,265.41 crore on Friday, as per stock exchange data.