BSE Sensex ended at fresh 1-1/2-year lows on Monday on the back of continued worries about Chinese equities, but the market finished off day's lows as European shares gained and as some investors saw domestic losses as overdone.
The Sensex ended 109 points lower at 24,825 - its lowest close since June 4, 2014. The Nifty closed at 7,563, off 37 points.
The Nifty has fallen nearly 5 per cent so far this year, as turbulent markets in China have raised doubts about Beijing's ability to manage the world's second-biggest economy. China's shares fell nearly 5 per cent today.
But analysts feel India's relatively stronger economic fundamentals will allow domestic markets to withstand shocks from China. Instead investors are soon expected to shift focus to earnings, with Tata Consultancy Services due to kick off earnings on Tuesday.
"We're seeing some short-covering, but worries about China still exist. I'm not very optimistic about Q3 earnings, we could fall further," said Alex Mathews, head of research at Geojit BNP Paribas
Oil stock ONGC fell 2 per cent after global crude prices slipped 3 per cent. Sintex Industries fell 7 per cent after the company lowered its revenue guidance.
Shares in NSE heavyweight Reliance Industries gained 2.7 per cent, building on the 1.23 percent gains from Friday.
Tata Motors gained 2 per cent despite concerns of a slowdown in China affecting sales.