Sensex dipped 116 points as the Reserve Bank of India maintained status quo on key bank rates against the market expectations of a rate cut.

The benchmark index opened on the lower side at 28,522 against the previous close of 28,560. It made a high of 28,576 and low of 28,386 before closing at 28,444. Turnover on BSE was up at Rs 3,332 crore against Rs 3,161 crore recorded on Monday.

The NSE Nifty was down 31 points at 8,525.

Many bank stocks gained in volatile trade after the RBI indicated that rate cuts may start early next year, provided the current inflation trend and changes in inflationary expectations continue. Interest rate sensitive auto and realty stocks declined.

Continuing its rally, Ashok Leyland gained two per cent to Rs 55 on Tuesday. The stock had gained 2.48 per cent on Monday after the company reported strong sales performance in November.

The company said its total sales rose 44 per cent in November to 7,732 units. Sales of medium and heavy commercial vehicle surged 92 per cent to 5,204 units. However, sale of light commercial vehicle declined five per cent to 2,528 units.

Three PSU oil market companies – HPCL, BPCL and IOC -- fell 1.06 per cent, 4 per cent and three per cent after the government hiked excise duty on petrol and diesel effective tonight.

As per reports, the government hiked excise duty on petrol Rs 2.25 per litre and on diesel by Re 1 a litre effective tonight. However, higher duties are unlikely to be passed on to consumers. This may impact margins of oil marketing firms, said reports.

Major gainers include Sun Pharma Advanced Research Company (10%), Wockhardt (9%), Bharat Electronics (9%), Raymond (9%), Jet Airways (8%), United Breweries (8%), Karnataka Bank (8%) and Allahabad Bank (6%).

Prominent losers were Infratel (-5%), Kailash Auto Finance (-5%), Srei Infra (-4%), BPCL (-4%), Balrampur Chini (-4%), Berger Paint (-3%) and Escorts (-3%).

Over half of the 30 Sensex constituents ended with losses led by GAIL (down 2.85 per cent), M&M (2.47 per cent), HDFC (1.51 per cent) and Hero MotoCorp (1.48 per cent).

Sectorwise, BSE IT index suffered the most by losing 1.48 per cent, followed by Auto 1.05 per cent and Oil & Gas 0.66 per cent, among others.

Global cues, however, were conducive as Asian bourses ended higher and Europe was better in its opening trades.

Meanwhile, Foreign Portfolio Investors sold shares worth net Rs 12.36 crore yesterday, as per provisional data.

European markets

European stocks rose amid an increase in M&A and as investors weighed stimulus prospects ahead of the European Central Bank meeting this week.

Stoxx 50 was up 11.73 points or 0.36 per cent at 3,244.64, FTSE 100 rose 77.70 points or 1.17 per cent to 6,734.07 and CAC 40 climbed 24.17 points or 0.55 per cent to 4,401.50.

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