Energy stocks were the biggest underperformers led by the sharp fall in market bellwether Reliance Industries, which traded with nearly 2.5 per cent losses. The company's share prices rose above the maximum buyback price of Rs 870 for the first time since the offering was announced on January 20. RIL has announced a closure of its buy back scheme.
IT stocks came under selling pressure after TCS, India's biggest software services exporter, said its margins may fall in the September quarter. TCS shares fell 2.8 per cent while Wipro was the top Nifty loser, down 3.8 per cent.
However, Infosys shares gained nearly 2 per cent after leading global brokerage Bank of America Merrill Lynch upgraded the stock to "buy".
On the Nifty, 25 of the 50 stocks traded with gains. PSU lender Punjab National Bank was up 5.5 per cent. Other public sector lenders - SBI and Bank of Baroda - were among the top Nifty gainers, rising 2.5-3 per cent.
Heavy equipment manufacturer BHEL jumped 4.2 per cent. The stock is recovering after a sharp selloff that has sent prices lower by 20 per cent over the last six months. Private steel maker JSPL, which has also witnessed a sharp selloff recently, extended gains.
Kingfisher Airlines extended gains, rising nearly 5 per cent on hopes of investment after the government allowed foreign airlines to invest in domestic carriers. However, SpiceJet shares fell 1.8 per cent. They were among the top traded stocks on the BSE 500.
Japan's Nikkei average fell on Tuesday as companies heavily exposed to China were caught up in tensions between China and Japan over a territorial dispute that disrupted business and production, and left investors pondering unsettled scenarios. European shares also traded with deep cuts in early trade.
(With inputs from Thomson Reuters)