Mumbai, Feb 5 (PTI) Benchmark indices Sensex and Nifty halted their three-day rally to close with deep cuts on Thursday, in line with bearish global markets, as participants turned cautious ahead of the RBI policy announcement amid geopolitical uncertainties.

Intense selling in metal, IT and capital goods stocks also dampened market sentiment, traders said.

In a bearish session, the 30-share BSE Sensex further dropped 503.76 points, or 0.60 per cent, to settle at 83,313.93. During the day, it tanked 666.07 points, or 0.79 per cent, to 83,151.62.

A total of 2,447 stocks declined while 1,737 advanced and 158 remained unchanged on the BSE.

The 50-share NSE Nifty declined 133.20 points, or 0.52 per cent, to end at 25,642.80.

"Indian equities saw consolidation, as weakness was followed by a sharp rally in recent sessions, driven by optimism around the US-India trade deal, suggesting profit booking was at play.

"Global cues added further pressure, with concerns over a broad-based tech sell-off in international markets and heightened US-Iran tensions leading to risk-off sentiment," Vinod Nair, Head of Research, Geojit Investments Limited, said.

Market participants are now turning their attention to the upcoming RBI policy meeting, Nair added.

The decision of the Monetary Policy Committee (MPC) will be announced by RBI Governor Sanjay Malhotra on Friday.

From the Sensex constituents, Eternal, Bharti Airtel, Bharat Electronics, ITC, Infosys, Reliance Industries, ICICI Bank and Asian Paints were among the major laggards.

In contrast, Trent, Tata Steel, State Bank of India and Bajaj Finance were the gainers.

Among sectoral indices, capital goods dropped 1.07 per cent, metal (1.05 per cent), consumer durables (0.88 per cent), BSE Focused IT (0.78 per cent), IT (0.76 per cent) and telecommunication (0.72 per cent).

BSE PSU Bank and oil & gas were the gainers.

In Asian markets, South Korea's Kospi ended nearly 4 per cent lower. Japan's Nikkei 225 index and Shanghai's SSE Composite index also ended in the negative territory, while Hong Kong's Hang Seng index settled higher.

European markets were trading lower.

US markets ended mostly lower on Wednesday. The Nasdaq Composite index tumbled 1.51 per cent, and the S&P 500 declined by 0.51 per cent. The Dow Jones Industrial Average ended 0.53 per cent higher.

"Indian equity markets traded in a tight range, signalling a wait-and-watch phase as investors remained cautious in the absence of fresh domestic triggers. While overall sentiment remained stable, the benchmarks struggled to sustain momentum at higher levels, reflecting a lack of follow-through buying despite earlier positives," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

Market participants remain on the sidelines, awaiting clearer signals from global macro developments, trends in foreign institutional flows, and further clarity on the progress of US-Iran negotiations to determine the market’s next decisive move, he added.

Foreign institutional investors bought equities worth Rs 29.79 crore on Wednesday, according to exchange data. Domestic Institutional Investors (DIIs) also bought stocks worth Rs 249.54 crore in the previous trade.

Brent crude, the global oil benchmark, dropped 1.32 per cent to USD 68.54 per barrel.

On Wednesday, the Sensex ended 78.56 points or 0.09 per cent higher at 83,817.69. The Nifty went up by 48.45 points or 0.19 per cent to settle at 25,776. PTI SUM SUM BAL BAL

Stock markets fell sharply as risk-off ahead of the central bank policy decision and global cues drove sectoral selling. Equity benchmarks fell sharply as risk-off sentiment ahead of the Reserve Bank's Monetary Policy Committee decision and adverse global cues triggered sectoral selling in metal, IT and capital goods; modest domestic and foreign institutional buying the prior session did not avert the decline.