Markets seemed to be in consolidation mode after strong rally as the benchmark S&P BSE Sensex and CNX Nifty declined 58.33 points and 23.30 points, respectively during the truncated week as operators decided to play safe after the Reserve Bank kept key interest rates unchanged.
Realty, metal, banking, power, capital goods and FMCG sectors attracted profit-booking and mainly weighed on Sensex.
However, buying was seen prominently in defensive IT and pharma stocks. Shares of IT majors TCS, Infosys and Wipro notched up 3.5-5.0 per cent gains, tracking weakness in rupee against the US dollar and strong American economic data that boosts prospects of their biggest market.
RBI Governor Raghuram Rajan, in monetary policy meet on Tuesday, kept the key rates unchanged for the fourth consecutive time, citing continued risks to inflation and difficult external situation.
The short-term lending rate remained at eight per cent, and the cash reserve requirement of banks at four per cent. The statutory liquidity ratio has also been retained at 22 per cent.
Brokers said local bourses were also impacted by weak trend on Asian bourses amid concern over tensions in Hong Kong and as Chinese manufacturing gauge missing estimates.
The BSE 30-share barometer resumed lower and moved in a range of 26,851.33 and 26,481.31 before concluding the week at 26,567.99, a net fall of 58.33 points or 0.22 per cent.
Last week, it had plunged by 464.10 points, or 1.71 per cent.
Similarly, the broad-based 50-issue CNX Nifty of the NSE also declined by 23.30 points, or 0.29 per cent, to 7,945.55.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) were closed on October 2nd and 3rd for observing 'Mahatma Gandhi Jayanthi' and 'Dussehra' and will also remain shut on Monday, October 6, on account of 'Bakra Id'.
The Reserve Bank (RBI) retained growth projection for current fiscal at 5.5 per cent and also said that future policy stance will be influenced by inflation outlook.
It said that the pick-up in GDP growth during Q1 may not be sustained in the next quarters.
Some more selling pressure may be seen in the coming sessions, particularly in rate sensitive sectors. Also, as long market holidays are coming, investors prefer to book profits.
In the coming sessions, global cues and second quarterly results shall be key triggers for market direction," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
Slowing down of capital inflows from FPIs/FIIs also affected the market sentiment. FPIs/FIIs bought shares worth Rs 11.22 crore during the week, including provisional figure of October 1.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "During the week, credit policy was announced and for the fourth consecutive time, RBI kept the key policy rates unchanged.
"RBI also stated that henceforth any changes in the key rates will be purely dependent on inflation. There was not any impact on the local markets as the outcome from the RBI credit policy was anticipated by markets."
"Growing political tension in Hong Kong and speculation over US interest rates along with geopolitical tension in Middle East forced other Asian markets to trade low and post the biggest quarterly drop in global equities for more than two years.
"In the coming week, the trading technicals are suggesting that the markets would be in positive trend, the CNX Nifty is expected to trade in the range of 7,900 to 8,060 and BSE Sensex is expected to trade in the range of 26,400 to 26,700," he added.
22 scrips out of the 30-share Sensex pack ended lower while 8 others finished higher.
Major losers were Tata Steel (5.38 per cent), Tata Power (3.97 per cent), ICICI Bank (3.36 per cent), BHEL (2.73 per cent), ONGC (2.32 per cent), Axis Bank (2.27 per cent), HUL (2.27 per cent), Maruti (2.19 per cent), ITC (2.07 per cent), Larsen (2.07 per cent), SSLT (1.58 per cent), Hindalco (1.43 per cent) and Coal India (1.18 per cent).
However, Sun Pharma rose by 6.61 per cent, followed by Wipro (5.03 per cent), Infosys (4.51 per cent), TCS (3.46 per cent), Cipla (1.92 per cent), HDFC (1.21 per cent) and Gail (1.18 per cent).
Among the S&P BSE sectoral indices, Realty fell by 3.52 per cent, followed by Metal (2.46 per cent), Bankex (1.80 per cent), Power (1.65 per cent), CG (1.53 per cent) and FMCG (1.52 per cent) while IT rose by 3.55 per cent, HC (3.20 per cent), Teck (2.80 per cent) and CD (2.70 per cent).
Mid-cap and Small-cap indices also rose by 1.24 per cent and 0.96 per cent, respectively on renewed demand from retail investors.
The total turnover at BSE and NSE fell to Rs 9,237.07 crore and Rs 43,382.07 crore from the last weekend's level of Rs 17,646.48 crore and Rs 89,849.82 crore, respectively.