Sustained selling in heavyweight counters on concerns over scanty rainfall in the country this year pulled the stock markets down on Tuesday.
Dealers said investors were also awaiting India's response to Saturday's terrorist attack in Jammu & Kashmir.
The Bombay Stock Exchange sensex settled with a loss of 49.53 points at 3,229.18, off from intra-day high of 3,286.94 points.
On the National Stock Exchange, the S&P CNX Nifty shed 12.05 points to close at 1,035.95. Losers beat gainers on thin volumes.
A dealer at a domestic brokerage house said: "The market is concerned over the delay in the monsoon, all of which makes the undertone jittery. Also, lack of clarity on how the border situation is will pan out affected market sentiments."
Infosys Technologies continued to remain under selling pressure on fears that the recent terrorist attack might delay the lifting of travel restrictions by foreign nations which, in turn, could hurt the IT sector. Infosys settled down 2.55 per cent at Rs 3,165.30. Other infotech majors such as HCL Technologies (down 4.20 per cent to Rs 232.40),) and Satyam Computer (down 1.34 per cent to Rs 235.25) also settled weak in a volatile trading session.
Media major Zee Telefilms bounced back from an intra-day low of Rs 114.60 to Rs 123.60 before settling at Rs 121.25, up 3.63 per cent over its Monday's close.
Meanwhile, both the Reliance group key stocks settled weak. Reliance Industries was down 3.33 per cent to Rs 257.10 and Reliance Petroleum slipped 2.73 per cent to Rs 23.20. Other heavyweight stocks such as State Bank of India (down 1.76 per cent to Rs 228.20), HPCL (down 2.63 per cent to Rs 290.25) and Bhel (down 0.61 per cent to Rs 171.75) ended lower on selling pressure.
FMCG major Hindustan Lever slipped 2.14 per cent to Rs 187.70 on concerns of insufficient rains denting rural incomes, thereby hurting the company's sales.
Key automobile stocks such as Bajaj Auto (down 3.02 per cent to Rs 510.35) and Hero Honda Motors (down 1.83 per cent to Rs 314.65) slipped amid fears of a fall in rural income, in the event of an unfavourable monsoon.
Elsewhere, cement stocks such as Grasim (down 2.73 per cent to Rs 331.05), ACC (down 1.91 per cent to Rs 151.90) and Larsen & Toubro (down 0.61 per cent to Rs 180.05) also lost ground on similar fears.
