Rupee ends down to 74.88 a dollar as markets worry over rising number of infections and fatalities.
Domestic equity benchmarks Sensex and Nifty erased early gains to finish with losses for the second day on the trot on Tuesday, as surging Covid-19 cases and growing localised restrictions continued to dent investor sentiment.
The BSE Sensex slipped 243.62 points or 0.51 per cent to close the session at 47,705.80, an over two-month low. Intra-day, the BSE gauge rose as much as 529 points to touch the day's peak of 48,478.34.
Likewise, the NSE Nifty climbed over 167 points to reclaim the key 14,500-level during the day, but surrendered all its gains to end at 14,296.40, showing a drop of 63.05 points or 0.44 per cent.
On the Sensex chart, UltraTech Cement, HCL Tech, HDFC, Tech Mahindra, HDFC Bank and HUL emerged as the major laggards -- falling as much as 4.70 per cent.
On the other hand, Bajaj Finserv, Dr Reddy’s, Bajaj Finance, Bajaj Auto, M&M and Maruti were among the top gainers, climbing up to 3.70 per cent.
Market analysts said a continued spike in fresh Covid-19 cases in the country and announcements of restrictions by several states have clearly dented investor sentiments and posed a threat to earnings recovery.
"Indian markets witnessed a bounce-back in its opening trade, however, failed to hold on to its early gains due to weak global cues and the possibility of a stricter lockdown in Maharashtra.
"Despite the vaccine drive kindling hopes of recovery, the trend in the market will depend on positive developments like decreasing Covid cases and lifting restrictions. IT and FMCG were the sectoral laggards while mid and small-caps outperformed," said Vinod Nair, Head of Research at Geojit Financial Services.
Sectorally, BSE IT index fell over 1 per cent, followed by teck with 0.77 per cent drop. Other major losers were basic materials, FMCG, finance and banking.
However, healthcare, capital goods, telecom and industrials closed in the green.
In the broader market, BSE midcap and small cap indices performed well to close with gains. But the large-cap index followed the benchmark to finish lower.
Elsewhere in Asia on Tuesday, equity bourses saw mixed trading as investors awaited the release of China's latest benchmark lending rate. Japan led losses among the region's major markets, followed by Hong Kong.
US stocks ended lower on Monday, slipping from last week's record levels.
Meanwhile, global crude oil benchmark Brent futures rose 0.77 per cent to USD 67.68 per barrel, despite concerns about the impact on oil demand going forward due to rising coronavirus cases in India.
The rupee pared its initial gains to close marginally down by 1 paisa at 74.88 against the US dollar on Tuesday due to worries that the alarming surge in Covid-19 cases could derail the economic recovery in the country.
At the interbank forex market, the domestic unit opened at 74.65 against the US dollar, but lost ground to close at 74.88 against the US dollar.
During the session, the local unit witnessed an intra-day high of 74.64 and a low of 74.98 against the greenback.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04 per cent to 91.03.
Traders said the local unit ended in the red as investors were concerned that the surge in coronavirus infections could result in stricter lockdowns, which in turn could hamper the country's economic recovery.
Foreign institutional investors were net sellers in the capital market on Monday as they sold shares worth Rs 1,633.70 crore, as per exchange data.
Bourses will remain closed on Wednesday for 'Ram Navami'.