Benchmarks reversed a two-session winning run to finish modestly lower today, reflecting losses across Asian peers ahead of imposition of additional US tariffs on Chinese exports.
The BSE Sensex fell over 70.85 points to close at 35,574.55, while the Nifty shed 20.15 points to 10,749.75.
Index heavyweight Reliance Industries slumped 2.53 per cent after the conglomerate's Chairman Mukesh Ambani unveiled a mega fixed-line broadband initiative, among other plans.
However, Infosys was the biggest loser in the Sensex pack, sinking 4.47 per cent ahead of its June quarter earnings next week.
Investors dialled down share purchases after a robust two-session upmove, while foreign capital outflows continue unabated, brokers said.
Asian markets mostly ended lower as caution crept in ahead of the July 6 deadline for imposition of US tariffs on Chinese goods, posing risks of a wider flare-up of trade tensions.
After opening higher, the 30-share Sensex quickly slipped into the red, largely in line with weak Asian cues, and hit a low of 35,517.79. It finally finished at 35,574.55, down by 70.85 points, or 0.20 per cent.
The index had climbed 380.99 points in the past two sessions, spurred by sustained buying by domestic institutional investors.
The wider NSE Nifty too fell by 20.15 points or 0.19 per cent to end at 10,749.75. It shuttled between 10,726.25 and 10,786.05 during the session.
Meanwhile, on a net basis, foreign institutional investors (FIIs) sold shares worth Rs 284.58 crore, while domestic institutional investors (DIIs) bought equities to the tune of Rs 611.01 crore in yesterday's trade, provisional data showed.
"Market traded in a narrow range while the selling pressure in IT and metal stocks capped the upside. Any signs of stability in bond yield and oil price may provide some turnaround in domestic sentiment.
"On the other hand, mid and small caps continued to underperform as investors are switching to large caps to minimise the risk...Asian market witnessed consolidation due to trade restrictions and weakening currency," said Vinod Nair, Head of Research, Geojit Financial Services.
Sensex laggards included Vedanta, that fell 3.09 per cent, Tata Steel 2.71 per cent, Sun Pharma 2.31 per cent, Tata Motors 2.06 per cent, Bharti Airtel 0.83 per cent, Power Grid 0.77 per cent and Axis bank 0.66 per cent, among others.
On the other hand, Yes Bank spurted 3.96 per cent after the bank received SEBI approval to launch a mutual fund business.
Other gainers were ITC 2.97 per cent, Bajaj Auto 2.45 per cent, Asian Paints 2.35 per cent, Coal India 2.27 per cent, M&M 1.34 per cent, Maruti Suzuki 1.28 per cent and Hero Motocorp 0.99 per cent, among others.
In sectoral terms, consumer durables plunged 2.78 per cent, realty 1.70 per cent, IT 1.60 per cent, metal 1.41 per cent, teck 1.34 per cent, healthcare 1.22 per cent, capital goods 0.61 per cent, oil and gas 0.52 per cent, power 0.49 per cent, infrastructure 0.45 per cent and PSU 0.29 per cent.
FMCG, auto and bankex finished with gains of up to 1.03 per cent.
Selling pressure also gathered momentum in broader markets, with the BSE mid-cap index falling 0.71 per cent and the small-cap gauge losing 0.40 per cent.
In Asia, Hong Kong's Hang Seng fell 0.21 per cent, Japan's Nikkei declined 0.78 per cent and China's Shanghai Composite Index slumped 0.91 per cent.
European markets were up in their early deals. Frankfurt DAX was trading higher by 0.97 per cent, while Paris CAC 40 rose 0.76 per cent. London's FTSE advanced 0.43 per cent.
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