Indian stock indices closed in the negative for the second straight day, as the possibility of a first interest rates hike in the US since June 2006, became more real, following Fed Chair Janet Yellen's view over confidence in the US economy.

The dollar strengthened after her comments and gold prices dropped to a six year low in the international markets.

Banking stocks continued to grind lower, with the biggest losers being Punjab National Bank, State Bank of India and Bank of Baroda. The stocks have been falling on new lending norms, which analysts say could squeeze margins of many banks.

Ultratech Cement, Hindalco, NTPC and Yes Bank were the biggest losers from the Nifty. Shares in Amtek Auto surged after reports that Bharat Forge and Mahindra CIE were interested in Amtek India's assets.

Bhushan Steel also had a solid rally after reports that the company could get Rs 3,000 crore through asset sale in Odisha.

Mid cap shares managed to remain resilient in a falling market with the index ending the day unchanged. GMR Infra, Reliance Infra and Havells were the top gainers from the space.

Meanwhile, markets across Europe were trading with gains, as all eyes were on ECB President Draghi to unveil a fresh round of stimulus.

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