Mumbai, Nov 24 (IANS): Heightened chances of a US rate hike, continued outflows of foreign funds and caution over the ongoing derivatives expiry dragged the Indian equity markets lower during the mid-afternoon trade session on Thursday.

Besides, massive depreciation in rupee which touched its new record low of 68.86 to a US dollar and political logjam over the demonetisation drive eroded investors' confidence.

The key Indian indices traded with losses of more than half a per cent each, as automobile, banking and healthcare stocks witnessed heavy selling pressure.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) receded by 60.80 points or 0.76 per cent to 7,972.50 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,049.14 points, traded at 25,875.12 points (at 2.00 p.m.) -- down 176.69 points or 0.68 per cent from the previous close at 26,051.81 points.

The Sensex touched a high of 26,049.14 points and a low of 25,810.97 points during the intra-day trade so far.

The BSE market breadth was tilted in favour of the bears -- with 1,250 declines and 1,117 advances.

"Markets traded in the red due to negative global cues. Caution prevailed ahead of the F&O (futures and options) expiry," Astha Jain, Senior Research Analyst at Hem Securities, told IANS.

"The minutes of the US Federal Reserve, which were released on Wednesday evening, suggested a possible rate hike next month. This triggered a steep decline in Asian and domestic markets."

On Wednesday, the equity markets closed in the green due to positive global cues, coupled with short covering and value buying.

The barometer index was up by 91.03 points or 0.35 per cent, whereas the NSE Nifty edged up by 31 points or 0.39 per cent.