The Sensex and Nifty ended slightly lower on Tuesday as investors saw recent strong gains as overdone, though the sentiment was broadly supported by hopes Parliament will soon pass a revamped Goods and Services Tax Bill.
The GST Bill, which has been listed for discussion by the Upper House of Parliament on Wednesday, would be the most far-reaching tax reform in India.
Domestic sentiment was boosted after India's weather office had said on Monday it expected June-September monsoon rains to be 106 per cent of a long-period average.
The NSE Bank Index eased 0.2 per cent, falling for a third consecutive session. The sub-index had surged 36 per cent from March to July.
ICICI Bank fell 1.7 per cent, extending declines to a second session after posting disappointing earnings on Friday.
Barring FMCG and IT, all other BSE sectoral indices ended lower. Among them, metal index fell the most by 1.78 per cent, realty 1.18 per cent, infrastructure 0.87 per cent and power 0.84 per cent, while FMCG index was up 1.68 per cent and IT 0.06 per cent.
Top five Sensex gainers were ITC (+3.73%), Maruti (+2.49%), Hero MotoCorp (+1.26%), ONGC (+1.01%) and Power Grid (+0.79%), while the major losers were Tata Motors (-2.8%), HDFC (-2.37%), Adani Ports (-1.62%), Bharti Airtel (-1.54%) and ICICI Bank (-1.54%).
GST Bill
Analysts however said the GST Bill's enactment was unlikely to spur any major rally given indexes were seen already reflecting a positive outcome.
The NSE index hit its highest since April 2015 on Monday.
“A rally in the short-term might not sustain for too long," said Neeraj Dewan, director at Quantum Securities.
“We can also expect some amount of profit-booking happening as the Bill progresses.”
Global markets
European shares hit a two-week low on Tuesday following poor results from some firms, including Metro and chipmaker Infineon, and another day of weak performance for the banking sector.
The STOXX 600 fell 0.8 per cent, its lowest level since July 19.