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Markets continue to trade in the negative territory with the BSE benchmark index down 124 points at 26,443 and the Nifty was hovering around the 7,900 mark at 7,902, down 43 points.
Earlier in the day, Nifty had slipped to a low of 7,883 as selling in index heavyweights weighed on the index.
Losses in L&T, HDFC and M&M alone contributed to a 144 points cut seen on the Sensex.
The broader markets were flat with a divergent trend. The smallcap index was up nearly 0.1% while the midcap index slipped by 0.05%.
Meanwhile in Asia, shares rose while the dollar languished after investors locked in some gains on its recent rally. MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.3 percent in late afternoon trade, after wobbling between positive and negative territory as it took its cues from a choppy, losing session on Wall Street overnight.
Japan's Nikkei stock average ended down 0.7 percent, after the Bank of Japan offered a bleaker view on factory output. The BOJ maintained its massive asset buying programme, as widely expected.
The BOJ's policy meeting on Tuesday was interrupted because Governor Haruhiko Kuroda was summoned to speak in parliament, a rare event that last happened in September 1998.
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(Updated at 1255 hrs)
Benchmark indices continue to maintain the dismal trend weighed down by HDFC Group shares, ITC and metal stocks.
At 11:45 AM, the 30-share Sensex was down 142 points at 26,426 and the 50-share Nifty was down 47 points at 7,898.
Growth in services activity picked up pace in September as order books filled up at a faster rate, a business survey showed on Tuesday.
The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, rose to 51.6 in September from 50.6 in August, reversing a slowdown seen in the previous two months.
Meanwhile, the provisional data released by the stock exchanges after trading hours on Wednesday, 1 October 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore on that day.
After a long weekend, the rupee strengthened by 22 paise to 61.39 against the dollar in early trade at the Interbank Foreign Exchange today on increased selling of the US currency by exporters and banks.
GLOBAL MARKETS
Japanese stocks clawed back early losses on Tuesday in response to comments from the Bank of Japan governor on the impact of the weak yen, but investors remained cautions ahead of the bank's policy decision later in the day.
"In general, a weak yen has some positive effect on exports and capital expenditure by pushing up revenues at companies with operations overseas. On the other hand, it's true a weak yen weighs on non-manufacturers' revenues by pushing up import costs," Kuroda told a parliament committee meeting in the morning.
The Nikkei share average, which started in negative territory, ended the morning session flat at 15,897.31 after flirting with positive territory.
SECTORS & STOCKS
BSE Metal index has slumped by almost 2% followed by counters like Banks and FMCG, both slipping by nearly 1% each. However, BSE Realty index has gained by nearly 1%.
Metal stocks are witnessing selling pressure on concerns over growth in China. Hindalco is the top Sensex loser, down over 4%. Sesa Sterlite, Tata Steel and Coal India have slipped between 1-2%.
M&M has declined by over 2%. The company announced that its two-wheeler unit has made a binding offer to acquire a 51% stake in PSA Peugeot Citroen's scooters business.
Other notable losers are HDFC, Cipla, Hero Moto, ONGC, BHEL and HDFC Bank.
On the gaining side, Tata Motors, HUL, Wipro, Bajaj Auto and NTPC have gained between 0.4-2%.
Shares of information technology (IT) companies maintain their upward march with frontline stocks such as Tata Consultancy Services (TCS), Infosys and HCL Technologies have hit their respective record high on the Bombay Stock Exchange (BSE).
Infosys was trading 1% higher at Rs 3,892, bouncing back over 3% from intra-day low on BSE.
Among other shares, MphasiS is down 2.9%. Analysts say there are concerns over revenues that the company gets from Hewlett-Packard.
Among broader markets, BSE Midcap and Smallcap indices have slipped marginally. The market breadth in BSE remains slightly negative with 1,316 shares declining and 1,110 shares advancing.
