Shares were volatile on Tuesday after gains in IT stocks were largely offset by declines in financial stocks, as cautious investors awaited more details on reports of a corporate tax rate cut by the government before making fresh bets.
Sensex was 128.80 points at 37,273.60, while the Nifty was 50.35 points down at 11,003.55.
Meanwhile, broader Asian shares climbed higher, reflecting gains seen in U.S. stocks on Monday, as hopes of more stimulus measures from China and Germany eased jitters of an impending global recession.
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Investors awaited more details on some media reports here suggesting that a task force set up to overhaul the 58-year old Income Tax Act recommended an across-the-board 25% tax rate for both local and foreign companies.
"We've not seen concrete steps by the government yet about (corporate tax) rate cut and other reforms, but some fears of a recession have faded," said Anand James, chief market strategist at Geojit Financial Services, Reuters said.
"It is safe to say that there might be a small shift in sentiment."
The Nifty PSU bank index, tracking state-owned banks, shed 1.5 percent, with State Bank of India falling about 1.08 percent.
Shares of Vodafone Idea Ltd fell as much as 6.67%. On Monday, the telecom operator said Ravinder Takkar would replace Balesh Sharma as its chief executive officer.
Telco lost 4.1 million subscribers in June, while rival Reliance Jio added 8.26 million users and Bharti Airtel lost 0.03 million subscribers, according to government data.
Names Ravinder Takkar as new CEO, replacing Balesh Sharma who stepped down within a year of appointment. As of last close, stock down 74 percent this year
The markets have been facing rough winds in the recent months, with the NSE index falling about 8 percent since a record high in June, amid slowing economic growth, a massive slowdown in the automobile industry and poorly received budget proposals.
"Until we get clarity on what is happening with global and local growth, markets will have some sort of downward bias," said Sunil Sharma, chief investment officer, Sanctum Wealth Management in Mumbai.
Meanwhile, IT stocks were trading in positive territory with the Nifty IT index rising up as much as 1.78 percent. IT services provider Infosys Ltd was the top gainer on the NSE Nifty, rising as much as 2.3 percent, while shares of industry peer Wipro Ltd gained as much as 1.25 percent.
--With agency inputs