Indian shares ended lower on Tuesday as investors booked profit after a rally in the previous session, even as the sentiment was supported by growing expectations that Britons will vote to remain in the European Union in this week's referendum.

The 30-share BSE index Sensex ended down 54.14 points or 0.2 per cent at 26,812.78 and the 50-share NSE index Nifty was down 18.6 points or 0.23 per cent at 8,219.90.

Among BSE sectoral indices, power index fell the most by 0.7 per cent, banking 0.65 per cent, healthcare 0.4 per cent and capital goods 0.39 per cent. On the other hand, auto index was up 0.58 per cent, consumer durables 0.39 per cent, oil & gas 0.34 per cent and infrastructure 0.04 per cent.

Top five Sensex gainers were ONGC (+1.68%), M&M (+0.92%), Tata Motors (+0.7%), Wipro (+0.59%) and HDFC (+0.38%), while the major losers were Adani Ports (-1.72%), NTPC (-1.43%), Axis Bank (-1.37%), Asian Paints (-1.18%) and HUL (-0.88%).

Earnings optimism

Indian shares have surged 17.9 per cent since hitting a near two-year low on February 29 on the back of rising optimism about earnings and the domestic economy.

The Union Government had announced on Monday sweeping reforms to rules on foreign direct investment, clearing the way for Apple to open stores in the country and announcing easier terms for investors in sectors ranging from civil aviation to pharmaceuticals.

That broader optimism helped shares overcome disappointment after the Reserve Bank of India Governor, Raghuram Rajan, had on Saturday unexpectedly said he would step down after his tenure ends in September.

But for now, analysts said, investors would be choosy, picking specific sectors such as mid-caps.

“It is a market where people are more comfortable buying into a bottom-up approach, buying into the mid-cap counter," said Deven Choksey, managing director at KR Choksey Securities.

'Global markets

European shares fell in early trading on Tuesday after a sharp rally in the previous session, with the market coming under pressure following a drop in mining and energy shares.

The Pan-European FTSEurofirst 300 and the STOXX Europe 600 indexes were both down 0.4 per cent by 0712 GMT after surging around 3.7 per cent in the previous session.

A report by SMC Global said: " Asian stocks fluctuated and the yen strengthened after the biggest rally in three months for global equities, as optimism over the UK referendum on leaving the European Union faded with polls showing the vote too close to call. US stocks closed up Monday, but off their session highs, following the lead of European markets as polls showed support swinging back toward the UK remaining a member of the European Union ahead of a referendum. Eurozone construction output decreased for the third straight month in April, Eurostat reported. Construction output dropped 0.2 per cent month-on-month in April after falling 1 per cent in March and 0.7 per cent in February. This was the third consecutive month of decline. Production in building decreased 0.4 per cent, while civil engineering grew 0.9 per cent. On a yearly basis, construction output slid 0.4 per cent, in contrast to March's 0.5 per cent increase. In the EU28, construction output grew 0.4 per cent from March and it declined 1.5 per cent from last year."

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