Mumbai, Sep 8 (PTI) Domestic markets pared all intra-day gains to close with modest losses on Tuesday as investors dialed down their exposure to riskier assets amid fresh border tensions with China.
A sliding rupee and macroeconomic uncertainties further soured risk appetite, traders said.
The BSE Sensex overcame a choppy start to gain momentum in the afternoon session, but witnessed heavy selling in the last hour of trade. It finally closed at 38,365.35, down 51.88 points or 0.14 per cent.
On similar lines, the broader NSE Nifty slipped 37.70 points or 0.33 per cent to finish at 11,317.35.
Tata Steel was the top loser in the Sensex pack, shedding 4.13 per cent, followed by Bharti Airtel, Axis Bank, ONGC, Sun Pharma, NTPC and SBI.
On the other hand, HCL Tech, Infosys, Reliance Industries, TCS, ICICI Bank and Tech Mahindra were among the gainers, rising up to 2.26 per cent.
On the macroeconomic front, ratings agencies Fitch and India Ratings projected deeper contraction for the Indian economy this fiscal due to the COVID-19 crisis.
Meanwhile, the army said Chinese troops fired shots in the air and attempted to close in on an Indian position in eastern Ladakh late on Monday night.
The remarks came after China's People's Liberation Army (PLA) alleged that the Indian troops crossed the LAC and 'outrageously fired' warning shots near the Pangong lake.
'Markets ended lower amid volatility, in continuation to the prevailing corrective phase. Though the bias was positive in the first half, the trend reversed in the last hour of trade and markets witnessed heightened selling pressure largely in response to rising tension between India and China. Besides, the sentiment impacted by sell-off in global markets and weakness in banking stocks.
'We're seeing a normal correction and it is healthy for markets. The recent dip is in line with profit-taking in the global markets. However, further escalation of border tension between India and China may deteriorate the sentiment further. Traders should focus more on risk management in the current scenario and prefer hedged trades,' said Ajit Mishra, VP - Research, Religare Broking.
BSE telecom, metal, basic materials, realty, industrials, capital goods and utilities indices fell as much as 4.01 per cent, while IT, energy, teck and oil and gas ended in the positive territory.
Broader BSE mid-cap and small-cap indices fell up to 1.49 per cent.
Global markets were mixed as investors awaited policy signals from the European Central Bank later this week.
Bourses in Shanghai, Hong Kong, Seoul and Tokyo ended on a positive note, while stock exchanges in Europe opened in the red.
Global oil benchmark Brent crude was trading 1.69 per cent lower at USD 41.30 per barrel.
In the forex market, the rupee depreciated 25 paise to close at 73.63 against the US dollar. PTI ANS ABM ANS ABM ABM