Sensex ends lower for 3rd straight session, Nifty below 10,600 ahead of RBI policy outcome

The Sensex and Nifty ended lower for a third straight session on Tuesday amid caution ahead of the Reserve Bank of India's policy decision, while sentiment was subdued after a survey showed services activity in May shrank for the first time in three months.

The broader Nifty closed down 0.33 per cent or 35.35 points at 10,593.15, while the benchmark BSE Sensex ended 0.31 per cent or 108.68 points lower at 34,903.21.

In the broader market, the BSE Midcap index and the BSE Smallcap indices slipped 1.2 per cent and 2.4 per cent, respectively.  

Market breadth, indicating the overall health of the market remained sharply negative. On the BSE, 2,159 stocks declined, 531 stocks gained, while 116 stocks remained unchanged.

"Consolidation continued as investors turned cautious ahead of RBI monetary policy and rupee is marginally weak due to liquidity constraint. Investors are expecting a status quo on policy rates, but RBI’s commentary would be keenly watched. The elevated levels of crude will influence RBI’s stance on inflation. Earnings cycle is yet to pick up while the divergence in expectation and actual results could trigger downgrades in FY19 estimates," said Vinod Nair, Head of Research, Geojit Financial Services.

Coal India, Bharti Airtel, Larsen and Toubro, Dr Reddy's and YES Bank were the top losers on Sensex, while Reliance Industries, Tata Steel, HDFC, Maruti Suzuki and HDFC Bank settled marginally higher, being the top gainers on the index. 

Sentiment was subdued as activity in service industry dipped in May after new orders stagnated, but business optimism was the highest since 2015 on expectations that demand will turn around, a business survey showed.

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The Nikkei/IHS Markit Services Purchasing Managers' Index fell to 49.6 in May from April's 51.4, sinking below the 50-mark that separates growth from contraction.

Meanwhile, domestic institutional investors (DIIs) sold shares worth a net Rs 712.41 crore, while foreign portfolio investors (FPIs) bought equities to the tune of Rs 2,354.03 crore yesterday, as per provisional data released by the stock exchanges.