The benchmark stock indices ended the trading day on a downtrend, with declines attributed to a drop in banking stocks and shares of the Tata group experiencing setbacks.
The NSE Nifty50 registered a decline of 0.72 percent, closing at 22,332.65, while the S&P BSE Sensex concluded 0.83 percent lower at 73,502.64.
Investor sentiment appeared cautious, particularly in anticipation of forthcoming domestic and US inflation data scheduled for release on Tuesday.
Small-cap stocks bore the brunt of the downturn, witnessing a decline of 2 percent, underperforming the benchmark indices. Similarly, mid-cap stocks also experienced a dip of 0.4 percent.
The Securities and Exchange Board of India (Sebi) highlighted areas of potential concern in the Indian equity markets, expressing apprehensions regarding overvalued assets and heightened fund flows into small- and mid-cap segments.
These segments displayed weaker performance compared to the Nifty50 since Sebi issued directives on February 27, urging mutual funds to provide more comprehensive risk disclosures.
The financial sector, encompassing both private and state-owned banks, observed declines ranging from 0.65 percent to 2 percent.
HDFC Bank faced a decline of 1.27 percent following concerns raised by CLSA regarding challenges in deposit growth and net interest margin recovery for the private lender.
Meanwhile, the State Bank of India experienced a decrease of 1.82 percent after the rejection of a plea by India's top court, denying the state-owned lender additional time to disclose the names of political donors.
Shares affiliated with the Tata Group, including Tata Consumer, Tata Steel, and Tata Motors, witnessed declines ranging from 1 percent to 3.1 percent. This downward trend was reportedly fueled by speculation suggesting that the likelihood of Tata Sons' listing shortly was low.
Looking ahead, India's consumer price inflation is expected to have declined to a four-month low in February, as indicated by a Reuters poll of economists. This data is anticipated to be released after market hours on Tuesday, shaping further market dynamics.
