Domestic benchmarks settled lower on Tuesday as caution over broader economic challenges and a sharp slide in Adani group stocks soured sentiment, while investors awaited some key economic data due later in the week.

The Nifty 50 index closed down 0.20 per cent at 16,951.70, while the S&P BSE Sensex fell 0.07 per cent to 57,613.72. Both benchmarks had risen as much as 0.5 per cent earlier in the session.

Ten of the 13 major sectoral indexes declined, with auto and information technology (IT) stocks losing nearly 1 per cent each. High weightage financials rose 0.27 per cent and capped the losses in benchmarks.

Adani stocks

Adani group companies declined between 3 per cent and 7.5 per cent after a report said the conglomerate was seeking to renegotiate terms of outstanding loans worth $4 billion taken to buy ACC and Ambuja Cements.

The group's flagship Adani Enterprises and Adani Ports were the top losers in the Nifty 50.

Though the waning of financial troubles in key US and European banking entities is providing some confidence to investors, "the overall undertone still remains that of cautious to negative," said Prashanth Tapse, senior vice president of research at Mehta Equities.

Economic data

Investors also awaited the US GDP and jobs data, due on March 30, which could provide insights into the impact of the Federal Reserve's monetary policy on inflation and growth. India's current account data due later this week was also on the radar.

"Sentiment will likely be negative in the short term ahead of key data," said Harsha Upadhyaya, president and chief investment officer - equity at Kotak Mahindra Asset Management Company.

"Till corporate earnings improve, expect markets to be rangebound."

Among domestic stocks, shares of Hero MotoCorp fell 2.56 per cent after analysts flagged near-term pressure for its entry-level motorcycles due to weak rural demand.

Kalyan Jewellers lost over 9 per cent after a media report said Warburg Pincus-owned Highdell Investment plans to sell a 2.5 per cent stake in the company through a block deal.

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