The upcoming July derivatives expiry later in the week would also add some volatility to the market proceedings.
'...and defensive until the global macro headwinds turn more benign.'
The 30-share Sensex ended down 261 points at 27,177 and the 50-share Nifty ended down 91 points at 8,214.
Food and fuel are two perennial areas of concern.
Bank shares were the top gainer in early trades with Bank of Baroda up over 4%.
Investors still seem to have a disinflation bias to their thinking.
The S&P BSE Sensex ended 46 points lower at 24,824 and Nifty50 settled at 7,555, down by 8 points after hitting intra-day high of 7,600.45.
Sensex gained nearly 0.4% or 96 points at 26087 level while Nifty ended up by 42 points or 0.5% at 7,791.40 level.
All evidence suggests that the US Federal Reserve will raise interest rates soon.
Sensex in green in afternoon trade.
Sanjay Mathur, managing director and head of economics research for Asia Pacific (ex-Japan), Royal Bank of Scotland, tells Business Standard that in the emerging market pack, India needs to learn lessons from Korea and Taiwan, which have managed their economic situations well.
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