The Indian equity benchmarks resumed decline, after a day's pause in the previous session, ahead monthly expiry of index and stock futures and option contracts. Infosys, Bharti Airtel, Larsen & Toubro, Tech Mahindra, Tata Motors and Bajaj Finance were the top drags on the Sensex. However, the losses were capped owing to buying interest in heavyweights like HDFC Bank, ICICI Bank, Reliance Industries, HDFC, IndusInd Bank and Power Grid.
The benchmarks staged a gap up opening which saw Nifty touch intraday high of 17,061.75 and Sensex rose as much as 295 points. Owing to high amount of call writing at 17,000 strike call option, Nifty gave up the level of 17,000.
The Sensex ended 40 points lower at 57,614 and Nifty 50 index declined 34 points to 16,952.
"We expect volatility to remain high due to the scheduled expiry of March month derivatives contracts. On the index front, participants have been trying to defend 16,900 in Nifty for the last three sessions and its breakdown may trigger a sharp reaction on the downside. Needless to say, the recent sell-off in the broader indices may deteriorate further. We thus reiterate our view to limit trade and maintain positions on both sides," said Ajit Mishra, VP, Technical Research, Religare Broking.
Eleven of 15 sector gauges compiled by the National Stock Exchange ended lower paced by Nifty Media index's 1.7 per cent fall. IT, Auto, Metal and Real Estate shares also faced selling pressure.
On the other hand, select banking and financial services shares witnessed buying interest. Broader markets outperformed their larger peers as Nifty Midcap 100 index declined 0.35 per cent and Nifty Smallcap 100 index fell nearly 1 per cent.
Adani Group shares witnessed selling pressure on Tuesday after report suggested that the Gautam Adani-led group sought more time to repay the debt associated with acquisition of Ambuja Cements and ACC.
Meanwhile, stock exchanges said that Adani Green Energy was put under the second stage of the long-term additional surveillance measure (ASM) framework from. In two separate circulars, the bourses said Adani Green Energy shall continue in the ASM framework but will be moved to the respective higher stage from March 28.
Adani Enterprises was top Nifty loser, the stock fell 7 per cent to Rs 1,603. Adani Ports, Tech Mahindra, Hero MotoCorp, Tata Motors, ONGC, Bharti Airtel, Bharat Petroleum, Wipro, Grasim Industries and Eicher Motors also fell between 1.2-5.2 per cent.
On the flipside, IndusInd Bank rose 2 per cent after the bank made interest payment of Rs 156.44 crore for its Additional Tier 1 bonds which were issued on March 28, 2019.
UPL, Dr Reddy's Labs, ICICI Bank, HDFC Bank, Power Grid, Hindalco, HDFC, Reliance Industries and NTPC also ended higher. The overall market breadth was negative as 2,560 shares ended lower while 991 closed higher on the BSE.
