Tata Steel Ltd and JSW Steel Ltd both advanced over 2%, while drugmaker Dr. Reddy's Laboratories Ltd topped gains with a 2.8% jump. Foreign investors pulled out 20.16 billion rupees ($281.99 million) from capital markets on Tuesday, according to NSE data. Trade sentiment globally remained subdued after data showed the US manufacturing sector contracted in August for the first time since 2016 amid worries about a weakening global economy and rising trade tensions between China and the United States.
"As far as the domestic economy is concerned, the news flow is all negative, with growth concerns worsened by weak auto sales," said Neeraj Dewan, director, Quantum Securities. "There is nothing positive coming investors' way for them to buy into equities. Some long term investors with deep pockets have to take a call on whether this is a bottom for the economy or not, only then will you see a revival happen."
Shares of Sun Pharmaceutical Industries Ltd fell as much as 5.2% after a report said that India's market regulator ordered a forensic audit against the drugmaker to look into allegations of financial irregularities and lapses in corporate governance standards.
IndusInd Bank Ltd dropped 3.5%, while heavyweight conglomerate Reliance Industries Ltd slid 1.7% to its lowest in nearly four weeks.