After a lower opening, the BSE Sensex tried to recover and logged a high of 28,576.39 on RBI Governor Raghuram Rajan opening the door for a rate cut early next year but the gains proved to be fleeting.

The Sensex later witnessed choppy trade as every rise met with selling. It settled at 28,444.01, a fall of 115.61 points or 0.40 percent. On Monday, it had slipped by 134.37 points.     

Similarly, the broader 50-issue Nifty of the NSE moved down further by 31.20 points, or 0.36 percent, to 8,524.70.     

"As anticipated, RBI kept the policy rate unchanged as it believed that a change in stance towards easing would be premature at the juncture...we believe RBI will refrain from cutting policy rates before the next budget in Feb 2015," said Dhananjay Sinha, Head-Institutional Research, Emkay Global.

Over half of the 30 Sensex constituents ended with losses led by GAIL (down 2.85 percent), M&M (2.36 percent), HDFC (1.51 percent) and Hero MotoCorp (1.48 percent).

Banking shares, like ICICI Bank and Axis Bank, closed up.
    
Rupee, which had breached 62-mark against dollar in previous sessions, today strengthened to 61.87 levels. This put pressure of shares IT companies, including TCS and Infosys, which earn most of their sales in the US currency.

Besides IT and auto shares, oil & gas shares also attracted profit selling after excise duty on petrol was hiked by Rs 2.25 per litre and by Re 1 a litre on diesel but retail pump rates won't rise as oil firms have decided to absorb the duty change for the time being.

Despite fall in Sensex and Nifty, total market breadth was slightly better on good demand from retail investors. The BSE-Midcap and BSE Smallcap indices outperformed the Sensex as they gained 0.91 percent and 0.55 percent respectively.     

The global mood was positive as most Asian and European indices were in the green. This gave some support to Indian markets, traders said.     

Overseas investors had sold shares worth Rs 12.36 crore on Monday, as per provisional data.

Chinese stocks led gains in Asia as Shanghai Composite ended higher by 3.11 percent on hopes its  central bank will ease monetary policy. Other key indices like Hong Kong, Nikkei, Singpaore and South Korea rose by 0.03 percent to 1.23 percent.

Taiwan's weighted index, however, fell by 0.91 percent.

European stocks were also trading higher amid an increase in mergers-acquisitions activity. Expectations of a stimulus in the European Central Bank's policy meeting on Thursday also kept traders busy. Key indices in France, Germany and UK were quoting 0.90 percent to 1.11 percent up.

Seventeen scrips out of the 30-share Sensex constituents ended lower while 13 finished higher (rpt) higher.

Major losers included GAIL India (2.85 percent), M&M (2.36 percent), Infosys (2.18 percent), HDFC (1.51 percent), Tata Motors (1.33 percent), Bajaj Auto (1.24 percent), Hero Motocorp (1.17 percent), BHEL (0.91 percent) and Maruti Suzuki (0.85 percent).

However, Hindalco rose by 2.51 percent, Bharti Airtel by 1.76 percent, L&T by 1.12 percent and Sesa Sterlite by 1.10 percent.

Among the S&P BSE sectoral indices, IT fell by 1.48 percent, Auto 1.05 percent and Oil&Gas 0.66 percent while Metal rose by 1.20 percent.
    
Total market breadth was positive as 1,508 stocks closed with gains, 1,419 settled with losses and 127 ruled steady. Total turnover rose to Rs 3,332.21 crore from Rs 3,160.94 crore on Monday.

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