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 per cent 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 per cent 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 per cent following a hike in petrol and diesel prices.
RIL too was higher by 0.31 per cent at Rs 1,038.40.
Among other Asian markets, Japan's Nikkei was down 2.19 per cent while Hong Kong's Hang Seng index fell 1.33 per cent in early trade. Shanghai Composite Index shed 0.29 per cent.
The US Dow Jones Industrial Average ended 0.31 per cent lower in yesterday's trade.