Equities began on a weak note in what would be an eventful week as investors continued to cash in after a two-day rally.
Reflecting profit booking, the benchmark Sensex crashed more than 670 points to end at 71355.22, while the Nifty surrendered 197.80 points to settle at 21513.
Experts expect stocks to consolidate around current levels for the next few sessions after which the focus will shift to the interim budget due on February 1.
Though the last budget of the Narendra Modi-government is unlikely to contain any big measures, it still remains to be seen if the Centre brings out some steps to woo the electorate ahead of the general polls.
The week ahead will see several developments that could influence stock prices.
For instance, the US retail inflation data for December will be released on Thursday.
It comes amid expectations the Fed will cut interest rates at least three times in 2024.
In the UK, the November gross domestic product (GDP) data will be released on Friday.
On Thursday, the Bank of Korea will meet. It will be the first Asian central bank to hold deliberations on interest rates.
Though no changes are expected, analysts are eager to catch indications of a rate cut.
Back home, the December retail inflation and industrial output data will be released on January 12. The retail inflation for the month is expected to come at around 5.5 per cent.
Moreover, this week will also see the start of the third quarter results season with TCS and Infosys on January 11.
The 30-share Sensex began in the green at 72113.25, but failed to maintain the pace with selling being witnessed in banking and FMCG stocks.
The BSE belwether crashed 725.11 points or 1 per cent in intra-day trades to 71301.04. Subsequently, the index settled at 71355.22, marking a fall of 670.93 points.
“Domestic equities saw profit booking ahead of key inflation data globally and the start of corporate earnings this week.
The inflation data from the US, China and India due this week will be of key importance.
"This led to a rise in the dollar index along with the 10-year bond yield,” Siddhartha Khemka, head — of retail research, at Motilal Oswal Financial Services, said.
Overall sentiments are currently subdued in the market and could lead to more consolidation over the next few days, he said.