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At 9:59 am, the Sensex traded 605.05 points - or 1.94 per cent - lower at 30,554.57 while the Nifty was down 180.00 points - or 1.98 per cent - at 8,931.90. Losses in financial, automobile and energy stocks pulled the markets lower however, however gains in pharmaceutical counters kept the downside in check.
Market breadth was negative with an advance-decline ratio of 1:2, which means two shares moved lower for every stock enjoying a gain. On the BSE 601 stocks traded higher while 1,049 counters moved lower.
In the Nifty basket of 50 shares, 44 stocks suffered losses at the time. Top percentage losers were Zee Entertainment, Bajaj Finance, Titan, Mahindra & Mahindra, ONGC, Maruti Suzuki and Bajaj Finserv, trading between 4.81 per cent and 13.45 per cent lower.
On the other hand, top gainers were Dr Reddy's, Sun Pharma, Cipla and Infosys, up between 1.58 per cent and 3.49 per cent.
The NSE's India VIX index - a gauge of the expectation of volatility in the near term - was up 4.47 per cent, having risen 5.52 per cent earlier in the session.
The government will release data on consumer inflation for the month of March after market hours. More than 40 economists in an April 7-8 poll by news agency Reuters expect retail inflation to come in at a four-month of 5.93 per cent in March.
The Reserve Bank of India (RBI) tracks consumer inflation primarily to formulate its monetary policy. Last month, it lowered the repo rate - the key interest rate - by 75 basis points, and has taken steps to shore up liquidity in line with most major central banks around the world. Softer inflation would give the RBI reason to cut borrowing costs further but some economists do not expect that to be the driver of policy for now.
Equities in other Asian markets moved lower, with MSCI's broadest index of Asia Pacific shares outside Japan was last seen trading 0.11 per cent lower while Japan's Nikkei 225 benchmark was down 0.76 per cent.
Last Friday, the Sensex had ended 4.23 per cent higher at 31,159.27 and the Nifty settled up 4.15 per cent at 9,111.90, marking the first weekly gain for both the indices after seven consecutive weekly losses.
The domestic financial markets will remain closed on Tuesday for Baba Saheb Ambedkar Jayanti.