Dragged down by Tata stocks, market on Tuesday moved lower with a 88-point fall in the benchmark Sensex as investors sold shares in various Tata firms a day after surprise ouster of Cyrus Mistry as chairman.
The ensuing legal battle between Mistry and Tata group added to investor concerns in these companies while foreign investors across the board were seen as a worried lot over emergence of yet another possible corporate battle.
Even the broader Nifty broke below the crucial 8,700-mark.
Caution was in the air ahead of the October expiry in the derivatives segment on Thursday, with participants lightening their bets.
"The market languished in a negative zone due to unfavourable winds from earnings and ambiguity over Tata group issue. Investors are eyeing more cues from the earnings season and at the same time expecting more volatility as expiry gets nearer," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
The Sensex closed down by 87.66 points, or 0.31 per cent, at 28,091.42. The gauge had gained 101.90 points in the previous session.
Tata group shares moved to the centrestage on continuous selling, mainly after Mistry was removed as its chairman in a surprise announcement on Monday.
Tata Steel, Tata Motors, Tata Power and TCS felt the heat in the Nifty basket, falling up to 2.51 per cent.
Shares of other Tata Group companies on BSE ran down too. Tata Elxsi (1.40 per cent), Tata Communications (2.26 per cent), Indian Hotels (3.16 per cent), Tata Chemicals (2.09 per cent), Titan (1.19 per cent) and Tata Metaliks (4.97 per cent) were also among the losers.
The 50-share Nifty breached below the crucial 8,700-mark before recovering partially to close lower by 17.65 points, or 0.20 per cent, at 8,691.30.
The trend in Asia remained mixed. Hong Kong's Hang Seng declined 0.17 per cent while Japan's Nikkei ended 0.76 per cent higher. China's Shanghai Composite was 0.12 per cent up.
European shares were moving in a positive terrain in early hours. Key indices from France, Germany and the UK rose.
Back home, out of the 30-share Sensex, 17 fell.
Others which lost grounds were M&M (2.72 per cent), GAIL (2.02 per cent), HUL (2 per cent), ONGC (1.30 per cent), HDFC Bank (1.19 per cent), Infosys (1.13 per cent) and ITC Ltd (1.02 per cent).
Coming to industry, IT fell by 0.84 per cent followed by FMCG, technology, capital goods and oil and gas.
Foreign portfolio investors (FPIs) net sold shares worth Rs 325.13 crore on Monday, data from the exchanges showed.
The broader markets, however, offered a mixed scene. The small-cap index rose 0.13 per cent and small-cap fell 0.30 per cent.