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In highly volatile trade, the BSE 30-share Sensex dropped by 84.86 points, or 0.48 per cent to 17,622.45, after climbing to 17,832.04.
The gauge, which gained over 5 per cent in the last five sessions, fell as Advanced Estimates released today indicated that the country's economic growth in 2011-12 is expected to fall to 6.9 per cent from 8.4 per cent last fiscal.
The GDP growth projection is a tad lower than the 7 per cent forecast made by the Reserve Bank in its quarterly monetary policy review last month.
Besides, a weak trend in the Asian region and lower openings in Europe amid persisting debt crisis in the euro- zone nations, especially Greece, fuelled the downtrend.
The 50-issue National Stock Exchange index Nifty also fell 26.50 points, or 0.49 per cent to 5,335.15, after touching the day's high of 5,413.35.
Capital goods, realty, power and metal stocks lost up to 2.29 per cent on all-round selling.
Bluechips such as Infosys, L&T, BHEL, Bharti Airtel, GAIL, HDFC Ltd, SBI, Hero MotoCorp, M&M, Maruti Suzuki, NTPC, Tata Steel, Tata Power and Hindalco closed the day in the red.
Markets @ 10.25 AM (Reuters)
The BSE Sensex shares nudged higher on Tuesday, with index heavyweight Reliance Industries advancing strongly, while investors were cautious ahead of the release of the government's GDP growth estimate for the current financial year.
Following a series of rate increases to fight inflation, India's economic expansion has tempered. The government's estimate comes with various policymakers and economists forecasting growth of between 7 and 7.5 percent in this fiscal year to March.
This compares with 8.4 percent growth in the previous year.
"The market has already rallied some 16 percent since December and it is understandable that some profit-taking is around the corner," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors in New Delhi.
"The market will be waiting for the government's growth prediction, and any upside to 7 percent could spur a fresh rally."
At 10:25 a.m. (0455 GMT), the main 30-share BSE index was up 0.26 percent at 17,753.02 points, with 16 of its components advancing.
Reliance, India's biggest company by market capitalization, accounted for much of the upside in the index. The energy conglomerate was up 1.8 percent after investment bank Goldman Sachs upgraded the stock to buy.
The BSE Sensex rose for five straight days to Monday, on strong foreign investment inflows and increased investor confidence in a turnaround for the world economy.
Mahindra & Mahindra , India's biggest utility vehicle maker, dropped as much as 1.3 percent before recovering to a fall of 0.8 percent ahead of the release of the company's third-quarter results.
Analysts are expecting the company to post lower profits despite strong revenue growth, as rising commodity prices have an adverse effect on margins.
Telecoms stocks fell on uncertainty in India's mobile phone market due to a ruling by the country's Supreme Court last week that ordered the cancellation of telecom licenses acquired during a scandal-tainted allocation process in 2008.
Market leader Bharti Airtel dropped 1.9 percent, while smaller rivals Idea and Reliance Communications were down 1.9 and 0.6 percent respectively.
Markets across the world edged down on Tuesday as Greek resistance to the strict conditions attached to a bailout fund for the country sapped recent momentum spurred by hopes the global economy is improving.
The 50-share NSE index was up 0.28 percent at 5,368.
In the broader market, there were marginally more gainers than losers, on volume of around 161 million shares.
Elsewhere in the region, the MSCI's broadest index of Asia Pacific shares outside Japan was down 0.1 percent, while Japan's Nikkei was down 0.5 percent.
STOCKS ON THE MOVE
* Manappuram Finance fell as much as 20 percent after the Reserve Bank of India said the non-banking financial company is not eligible to accept public deposits.
* Hindustan Unilever dropped as much as 2.3 percent after Citi downgraded the leading Indian consumer goods maker to 'sell' from 'neutral'.
* Tata Consultancy Services was up 0.9 percent after the Financial Express newspaper reported on Tuesday that the largest Indian IT services company has been shortlisted for a government project worth 20 billion rupees.
MAIN TOP THREE BY VOLUME
* Unitech on 14.8 million shares
* Manappuram Finance on 8.1 million shares
* Lanco Infratech on 6.0 million shares
Markets @ 09.00 AM (PTI)
The BSE Sensex rose 0.3 percent early on Tuesday, led by index heavyweight Reliance Industries , continuing a five-day rally ahead of the release of the government's GDP growth estimate for the current financial year
Reliance, India's biggest company by market capitalization, was up 0.4 percent after Goldman Sachs upgraded the refiner to buy.
At 9:16 a.m. the main 30-share BSE index was up 0.28 percent at 17,755.82, with 23 of its components advancing.
The 50-share NSE index was up 0.18 percent at 5,371.6
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