MUMBAI: Equity benchmark Sensex pared gains to settle over 289 points lower on heavy sell-offs mainly in bank, auto and energy stocks as liquidity constraints, tepid corporate earnings and woes in automobile sector spooked investors.
Likewise, the NSE Nifty fell nearly 104 points to close at 11,085 -- a near five-month low level for the index.
Opening on a positive note, Indian equities held ground for a better part of the session tracking recovery in Asian markets as investors braced themselves for the highly-anticipated outcome of the US Federal Reserve's policy meet and the US-China trade talks.
The 30-share Sensex opened higher at 37,735.54 and swung between a high of 37,950.21 and low of 37,359.03. Surrendering all its gains in the fag-end of the session, the BSE gauge finally settled at 37,397.24, plummeting 289.13 points or 0.77 per cent.
The broader NSE index Nifty too faced heavy volatility as it hit a high of 11,267.45 and low of 11,072.65 during the session. The 50-share barometer settled the day at 11,085.40, dropping 103.80 points or 0.93 per cent.
In the Sensex pack, Yes bank emerged as the biggest loser, falling 9.13 per cent, followed by IndusInd Bank (6.66 per cent), HeroMotocorp (6.01 per cent), Sun Pharma (4.79 per cent) and SBI (4.70 per cent).
Other losers were Tata Steel, Vedanta, Tata Motors, Reliance, Axis Bank, Bajaj Auto, ONGC, HDFC and ICICI Bank, among others.
On the other hand, Bharti Airtel topped the gainers' chart, up 3.19 per cent, followed by TCS (2.32 per cent), HCL Tech (0.83 per cent), ITC (0.49 per cent), HDFC Bank (0.39 per cent), HUL (0.37 per cent), L&T (0.36 per cent), PowerGrid (0.24 per cent), Infosys (0.16 per cent) and NTPC (0.08 per cent).
Sectorally, BSE metal was the worst performer with 3.25 per cent drop. Other major laggards were energy (2.42 per cent), basic materials (2.32 per cent), oil & gas (2.14 per cent), auto (2.12 per cent) and bankex (1.86 per cent).
"Broad-based selling dragged the indices to lower level as investors remain cautious ahead of US-China trade talks, FED policy, US job data and mixed bag of ongoing domestic corporate results. Liquidity constraints and sluggish outlook on auto sector indicates that consolidation may continue. Fall in 10 year bond yield in expectation of further 25 bps rate cut by RBI may ease liquidity crunch to some extent," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.
Sustained foreign fund outflows also dampened investor mood in the domestic equities.
Foreign investors sold equities worth Rs 704.42 crore on a net basis on Monday, as per provisional data with stock exchanges.
The Indian rupee on Tuesday fell by 10 paise to 68.85 against the US dollar.
While, Brent Oil Futures, the global crude benchmark, traded 0.82 per cent higher at USD 64.14 per barrel.
In Asian markets, Shanghai Composite Index, Hang Seng, Nikkei and Kospi closed on a positive note ahead of US-China trade talks and Federal reserve policy. European stocks were steady in opening trade.