Indian markets continued to slip lower as cautious investors resorted to profit booking on concerns ofUS debt default and after a higher-than-expected rate hike by theRBI. The trade is likely to churn volatile as the session progresses due to settlement of July F&O series.

"Multiple pressure points are at work in the markets at the current juncture. The RBI's shock treatment is on top of the list followed by the political posturing in the US over how to manage the debt crisis. Mind you, the eurozone credit problems are not over yet.

Moderation in FII inflows is also a cause for concern. Meanwhile, SEBI's Board will meet today to mull a string of important issues.

The start will be soft due to a worldwide sell-off linked to the US debt drama. Wall Street suffered badly overnight while European stocks too were hit. Asian markets are mostly lower as well.

The key indices will go through usual intraday gyrations associated with F&O expiry. For the Nifty, the key level to watch will be 5500 on the downside and 5600 on the higher side," said IIFL report.

At 10:01 am; National Stock Exchange'sNifty was at 5500.55, down 46.25 points or 0.83 per cent. The broader index touched a high of 5512.10 and low of 5491.30 in trade so far.

Bombay Stock Exchange'sSensex was at 18281.88, down 150.37 points or 0.82 per cent. The 30-share index touched intraday low of 18255.62 and high of 18327.85

BSE Midcap Index was down 0.66 per cent and BSE Smallcap Index moved 0.53 per cent lower.

Amongst sectoral indices BSE IT Index was down 1.52 per cent, BSE Metal Index declined 1.48 per cent, BSE Oil&gas Index moved 1.13 per cent lower and BSE Realty Index slipped 0.93 per cent. BSE FMCG Index was up 0.39 per cent.

Punjab National Bank (-3.02%), HCL Tech (-2.81%), Ambuja Cement (-2.22%),Infosys Technologies (-1.89%) and NTPC (-1.83%) were amongst the top losers.

ITC (1.14%), BHEL (0.81%), Maruti Suzuki (0.79%),Siemens (0.59%) and Bharti Airtel (0.36%) were the major Nifty gainers.

Market breadth was negative on the NSE with 1175 gainers against 1907 losers.

Meanwhile, the Asian markets were also reeling under selling pressure. Nikkei 225 was down 1.16 per cent, Hang Seng fell 1.03 per cent and Seoul Composite moved 0.78 per cent lower.