Mumbai, Mar 15 (IANS): Rising inflation, along with a rise in global bond yields, pulled India's key equity indices deep into the red on Monday.

Besides, high stock valuation along with a surge in Covid-19 cases dampened traders' sentiments.

Furthermore, Brent crude oil was back near $70 a barrel mark.

Globally, Asian markets were mixed in subdued trading on Monday, ahead of a meeting by the US Federal Reserve later in the week.

The European stocks advanced extending recent gains as vaccines are rolled out, restrictions are lifted and stimulus works its way through the global economy.

On the domestic front, markets opened in the red on the back of weak cues and drifted lower on higher WPI and partial lockdown in certain states.

However, rally in metals and IT stocks in the afternoon trade with support from financials helped indices recoup part of the losses.

Among sectors, metals and IT gained the most while media, pharma and bank fell the most.

The S&P BSE Sensex went down by 397 points, or 0.78 per cent, to 50,395.08 points from the previous close.

The NSE Nifty50 on the National Stock Exchange closed at 14,929.50, down by 101.45 points, or 0.67 per cent, from its previous close.

"Indian benchmark equity indices fell for the second day in a row on March 15, touching a two week low in the process. The Nifty fell in the initial minutes of trade, but formed an intra day low at 1305 hrs (down 279 points)," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"Later a recovery ensued and the Nifty closed much above its intraday low."

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: "Cool down in VIX below 21-20 zones is required for a bullish grip and smoother move in the market. While the long-term structure of the market continues to remain positive, it may face some hurdles in the near term due to concerns over the bond yields, commodity prices and risk of increase in inflation."

"Rising bond yields may cap equity valuations as the RBI may have to do a fine balancing act to keep bond yields at lower levels while managing the government's borrowing programme."

Vinod Nair, Head of Research at Geojit Financial Services, said: "Weakness in national macro data and rise in global bond yield ahead of the crucial Fed monetary policy meeting dented domestic momentum. Both the inflations of retail and wholesale, inclined higher than estimated while industrial production de-grew in January 2021."

"However, optimism in European and other Asian markets helped to recover from the sharp initial losses. We can expect this volatility to stabilise based on the global outlook post a confirmation from the Fed to maintain an accommodative policy."