The BSE Sensex slipped into negative territory in the afternoon session on Tuesday as investors turned cautious ahead of the Euro Zone meeting.
The Sensex ended down 37 points or 0.13 per cent at 28,171.69 while the NSE Nifty lost 11.35 points or 0.13 per cent to 8,510.80.
The Sensex had gained 262.96 points in the past two sessions.
Coal India and HDFC lent support, logging gains of about 2 per cent. Wipro, Sun Pharma, Infosys, HDFC Bank, Bajaj Auto, Axis Bank, Dr Reddy's and SBI were the other gainers.
NTPC, Vedanta, Hero MotoCorp, ONGC, Hindalco and Reliance were down by over 1 per cent.
Almost all the BSE sectoral indices came under pressure. Realty and consumer durables managed to hold on to their gains.
Brokers said increased buying by foreign funds and retail investors, dismissing any adverse fallout from the Greece crisis amid hopes of a rates cut by the Reserve Bank following reports of above—normal progress in monsoon so far buoyed trading sentiments.
European markets
European stock and bond markets steadied on Tuesday before a euro zone leaders summit to discuss the Greek debt crisis while a further fall in Chinese shares reminded investors of other dark clouds on the horizon.
Oil recovered some ground after Monday's stomach-churning selloff prompted by Greeks' overwhelming rejection of the terms of a bailout deal and the Chinese stock markets turmoil.
Euro zone leaders meet in Brussels, awaiting proposals from Greek Prime Minister Alexis Tsipras as his country's banks rapidly run out of cash and the European Central Bank tightened the noose on funding. Failure to reach a deal would increase the likelihood of Greece leaving the single currency.
The Euro STOXX 50 index of euro zone blue-chip shares rose 0.2 percent after falling 2.2 percent on Monday. Germany's DAX index rose 0.3 percent while Italy's FTSE MIB was up 1.4 percent.
Asian shares
Most Asian stocks drooped on Tuesday as Chinese equity markets went into a fresh tailspin, fraying investor nerves already strained by uncertainty hanging over the future of Greece and the European currency union.
Chinese shares fell more than 5 per cent at one point despite unprecedented steps last weekend to stabilise the plummeting market, with the CSI 300 index falling to near four-month lows.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent, led by Hong Kong and South Korea, though markets in developed countries fared better.
Japan's Nikkei rose 1.4 per cent after a sharp fall on Monday while European shares were seen mostly flat as investors await a euro zone summit on Greece later in the day.
For now, investors are holding out hope that Greece will manage to strike a deal with its creditors and prevent an exit from the euro zone.