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Twenty nine out of the 50 Nifty stocks closed lower for the day. Heavyweight Reliance Industries weighed down the most on the index, with the stock closing 2.8 per cent lower.
The Nifty Energy - comprising energy stocks - declined 2.2 per cent. Bharat Petroleum shares fell 4.1 per cent, a day after the company reported its earnings for the July-September period. Bharat Petroleum's net profit in the quarter nearly halved to Rs 1,218 crore, hurt by higher expenses on account of forex losses.
The Nifty Bank - comprising banking stocks - ended 0.6 per cent lower. Shares in private sector banks ICICI Bank, Kotak Mahindra Bank and IndusInd Bank fell 1 per cent, 1.6 and 4.2 per cent respectively.
Analysts say corporate earnings from some companies lifted the sentiment somewhat. "A couple of banks have come out with a good set of results, so there is optimism on earnings growth in corporate banks," news agency Reuters cited Neeraj Dewan, director at Quantum Securities, as saying.
State-run Union Bank of India posted a surprise quarterly profit on Monday as it set aside lower provisions for bad loans. The stock ended 8.6 per cent higher on Tuesday.
On the other hand, Nifty IT - the index of technology shares - finished 1.6 per cent higher, led by Tech Mahindra, HCL Tech and Infibeam - which rose between 2.3 per cent and 7.9 per cent.
The rupee slipped to a one-week low of 73.62 against the dollar, boosting software services exporters such as Infosys and Tata Consultancy Services. Rupee depreciation improves profitability for IT companies, which earn a significant portion of revenues from the US and European markets.
Lacklustre trade in domestic markets came amid a choppy movement in other Asian peers, after China made a fresh attempt to stabilise its stock markets but investors remained cautious about further escalations in the Sino-US trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan swung in and out of negative territory. The index, down 12 per cent this month, was on track for its biggest October decline since 2008.
Meanwhile, net sale of equities by foreign portfolio investors (FPIs) stood at Rs 2,230.79 crore on Monday, while domestic institutional investors (DIIs) were net buyers of stocks worth Rs 2,526.90 crore, according to provisional data available with stock exchanges.
(With agency inputs)