Indian stocks closed at their lowest level in over two weeks on Tuesday as the overall market sentiment remained cautious due to continued worries about China markets.
The 30-share BSE index Sensex ended lower by 43.01 points or 0.17 per cent at 25,580.34 and the 50-share NSE index Nifty ended down by 6.65 points or 0.09 per cent at 7,784.65.
Among BSE sectoral indices, IT index fell the most by 0.42 per cent, followed by TECk 0.41 per cent, banking 0.32 per cent and auto 0.31 per cent. On the other hand, metal index remained investors' favourite and was up 2.2 per cent, followed by oil & gas 1.93 per cent, realty 1.39 per cent and infrastructure 0.61 per cent.
Top five Sensex losers were Coal India (-1.35%), State Bank of India (-1.22%), Hero MotoCorp (-1.11%), HUL (-1.09%) and TCS (-1.06%), while the major gainers were Tata Steel (+6.65%), GAIL (+3.6%), Asian Paints (+2.29%), ONGC (+1.47%) and Reliance (+0.97%).
Gains were led by blue-chips stocks that fell on Monday. Reliance Industries rose 0.97 per cent after falling 2 per cent in the previous session.
Larsen & Toubro rose 0.16 per cent after losing 2.6 per cent on Monday.
Mahindra and Mahindra trimmed gains but ended 0.31 per cent higher after the Supreme Court upheld a December ruling that temporarily banned the sale of large diesel cars in New Delhi. The stock rose as much as 2.37 per cent earlier.
Apollo Hospitals' shares recovered to close 1.35 per cent higher at Rs 1,466.75 on the BSE after falling as much as 1.22 per cent intra-day.
Indian shares fell more than 2 per cent on Monday, with the broader NSE index posting its biggest single-day percentage fall in over four months, after Chinese shares posted steep falls on the back of weak economic data.
The caution over global markets comes at a time when domestic investors are concerned about the weak state of India's corporate earnings.
UBS said corporate earnings consensus for FY16, FY17 and FY18 still looked optimistic, and expected about an 8 per cent cut to earnings forecasts this year.
Tata Consultancy Services will kick start the earning season on January 12.
"After the fall yesterday there is some amount of caution that traders are exercising," said Deven Choksey, managing director at KR Choksey Securities.
Asian share markets retreated in choppy trade on Tuesday, led by Chinese stocks, whose early rebound fizzled out as investors remained unconvinced by Beijing’s moves to restore market confidence following a disasterous start to the new year.
A report by SMC Global said: "The stocks on the Asian bourses reversed early losses and swung back higher, tracking the recovery in the Chinese indices after the huge sell-off seen yesterday. Overnight, US benchmark indexes lost up to 2 per cent as concerns grew that the dive in the Chinese stocks was the start of another volatile period after last summer's dramatic market rout. Japan's monetary base jumped 29.5 per cent on year in December, the Bank of Japan said on Tuesday, coming in at 346.379 trillion yen. That follows the 32.5 per cent spike in November. Banknotes in circulation added an annual 6.1 per cent, while coins in circulation gained 0.8 per cent. Current account balances surged 42.6 per cent, including a 42.7 per cent spike in reserve balances. The adjusted monetary base advanced 6.0 per cent to 348.671 trillion yen. The monetary base gained 31.5 per cent in the fourth quarter, and 34.0 per cent for all of 2015."
European shares were set to rebound on Tuesday following a recovery in commodities prices and some stabilisation in Chinese markets, a day after poor Chinese factory numbers triggered a sharp sell-off in local equities and hit world markets.