Sensex down over 100 points as banking stocks fall

The BSE Sensex dropped over 130 points, while the broader Nifty came close to breaching the 5,800 mark in the closing hour on Tuesday. Global markets were nervous on account of uncertainty about the future of the U.S. monetary stimulus programme.

The U.S. central bank kicks off a two-day meeting later in the day and markets are on alert for guidance on when and how quickly it will look to wind down its bond buying programme.

Banking stocks were among the biggest underperformers ahead of the Fed's meeting ending on Wednesday as an early end to U.S. monetary stimulus is raising worries about a weaker rupee and hence a delay in any potential RBI rate cuts.

The Reserve Bank of India kept interest rates unchanged on Monday, warning of upward risks to inflation as its currency is among the hardest hit amid a global emerging markets sell-off.

33 stocks traded lower on the Nifty. Public sector lender Bank of Baroda was among the big losers, down over 3 per cent, while Axis Bank fell 2.2 per cent. Punjab National Bank, HDFC Bank and IndusInd Bank also saw sharp selling pressure.

Drugmaker Ranbaxy was the top Nifty loser on concerns of margin compression.

Tata Steel, Kotak Mahindra, Sesa Goa and Tata Power shares were among the Nifty gainers. Reliance Communications surged 12 per cent to hit a new 52-week high after telecom regulator's new roaming tariff ceiling is seen as positive for mobile carriers.

Foreign institutional investors have been sellers of Indian shares for five consecutive sessions, totaling Rs 2,895 crore, according to exchange and regulatory data.