Banking stocks came in for heavy selling pressure with Morgan Stanley downgrading Axis Bank to 'underweight' from 'equal weight', citing rising impairments.

Axis Bank ended the day sharply lower down almost 5%, while the nation's largest private sector lender ICICI Bank dropped by more than 3.5%. Public sector banking stocks also came in for some severe selling pressure with State Bank of India, Bank of Baroda, Oriental Bank of Commerce and Andhra Bank all losing more than 2%.

Index stocks that saw unwinding in trade today were Bhel, Larsen and Toubro, Ranbaxy Laboratories, Jindal Steel and Tata Steel.

Among the shares that gained in trade today were Tata Consultancy Services, Hindustan Unilever and Bharti Airtel.

Markets are expected to continue to be under pressure, as sentiment has turned bearish on account of the ongoing deadlock in parliament.

Equities are now expected to take cues from the forthcoming European Central Bank (ECB) meeting, which is likely to take place on Thursday. Any hints of quantitative easing measures by the ECB President is likely to fuel a fresh rally in global stocks, including India.

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