Mumbai: Dragged down by Tata stocks, market 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 percent, 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 yesterday.
Tata Steel, Tata Motors, Tata Power and TCS felt the heat in the Nifty basket, falling up to 2.51 percent.
Shares of other Tata Group companies on BSE ran down too. Tata Elxsi (1.40 percent), Tata Communications (2.26 percent), Indian Hotels (3.16 percent), Tata Chemicals (2.09 percent), Titan (1.19 percent) and Tata Metaliks (4.97 percent) 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 percent, at 8,691.30.
The trend in Asia remained mixed. Hong Kong's Hang Seng declined 0.17 percent while Japan's Nikkei ended 0.76 percent higher. China's Shanghai Composite was 0.12 percent 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 percent), GAIL (2.02 percent), HUL (2 percent), ONGC (1.30 percent), HDFC Bank (1.19 percent), Inosys (1.13 percent) and ITC Ltd (1.02 percent).
Coming to industry, IT fell by 0.84 percent followed by FMCG, technology, capital goods and oil and gas.
Foreign portfolio investors (FPIs) net sold shares worth Rs 325.13 crore yesterday, data from the exchanges showed.
The broader markets, however, offered a mixed scene. The small-cap index rose 0.13 percent and small-cap fell 0.30 percent.
US stocks registered impressive gains yesterday on a flurry of mergers and acquisitions. Latest data showed that the Markit flash US manufacturing purchasing managers' index rose to 53.2 in October from 51.5 in September.
Adani Ports rose by 9.43 percent, followed by Dr Reddy's by 3.59, ICICI Bank 1.60 percent, Axis Bank 1.49 percent and Bharti Airtel 1.48 percent.
The market breadth turned negative as 1,446 stocks ended in the red, 1,344 closed in the green while 235 ruled steady.
The total turnover on BSE came in at Rs 2,987.80 crore, lower than Rs 3,396.82 crore registered during the previous trading session.