Mumbai: Domestic investors were cautious ahead of Reserve Bank's monetary policy meet as the market benchmark Sensex dropped over 125 points in early trade while Asian cues were muted on overnight losses in US and fall in oil prices.
The 30-share index, which had gained 130.01 points in the previous session, was trading 125.40 points or 0.49 percent lower at 25,274.25 with realty, auto, metal, banking, teck and IT stocks leading the fall.
The NSE Nifty also down by 32.80 points or 0.42 percent at 7,726.
Brokers said besides a weak trend at other Asian bourses following overnight losses in the US markets, offloading of positions by participants ahead of RBI's first bi-monthly monetary policy for 2016-17 to be announced later in the day, influenced the sentiment.
Bucking the trend, stocks of state-run oil marketing companies such as Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation were trending higher by up to 2.36 percent following a hike in petrol and diesel prices.
RIL too was higher by 0.31 percent at Rs 1,038.40.
Among other Asian markets, Japan's Nikkei was down 2.19 percent while Hong Kong's Hang Seng index fell 1.33 percent in early trade. Shanghai Composite Index shed 0.29 percent.
The US Dow Jones Industrial Average ended 0.31 percent lower in yesterday's trade