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.