RTTNews - As European stocks reversed their early gains and U.S. stocks futures dropped, the Indian market, which rose sharply in early trading on firmer Asian cues, slipped deep into the red before recovering some lost ground in late trading.

Considerable amount of profit taking following gains in the past few sessions and sluggish performance of the export sector for the tenth straight month in July also weighed on market movement.

On a year-over-year basis, merchandise shipments from India dropped 28.4 percent in July to $13.62 billion after sliding 27.7 percent in the previous month, government data showed on Tuesday. For the first four months of the current fiscal year, exports were down 34.1% to $49.65 billion from the same period in the previous year.

Separately, findings of a latest survey showed that India's manufacturing activity expanded at is slowest pace in five months in August. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, fell to53.2 in August from a revised reading of 55.4 in the previous month.

The BSE Sensex, which hit a high of 15,923 earlier in the session, tumbled to the day's low of 15,475 before finishing at 15,551, down 115 points or 0.74% from the previous close. Similarly, the S&P CNX Nifty fell 37 points or 0.79% to 4,625.

On the BSE, the mid-cap index moved down 1.45% and the small-cap index shed 1.51%, underperforming large-caps. Realty, metal, power and capital goods stocks bore the brunt of the selling after recent gains, while auto stocks bucked the declining trend with about 2.5% gains on robust vehicle sales reported by Maruti Suzuki and TVS Motor for August. Select IT stocks also closed firm.

Among the major decliners, ACC tumbled 3.62%, Sterlite fell 2.88%, HDFC gave off 2.49%, BHEL eased 2.31%, Jaiprakash Associates lost 2.25% and ONGC slipped 1.98%.

Hindalco Industries, Reliance Infrastructure, DLF, Tata Steel, HDFC Bank, Mahindra & Mahindra, NTPC, Grasim Industries, Larsen & Toubro and Reliance Industries were the other prominent losers.

On the other hand, Maruti Suzuki soared 7.61%, Tata Motors rallied 5.82%, Hero Honda Motors advanced 1.55%, Wipro gained 1.50%, Reliance Communication added 1.34%, Hindustan Unilever rose 0.71% and Infosys edged up 0.49%.

State-run power firm NHPC received a lukewarm response on its debut. After rising as much as 10 percent in early trading, the stock finished at Rs.36.70, a mere 2% premium over its IPO price of Rs.36 per share.

Sterlite Industries fell 2.88% after a U.S. bankruptcy court judge recommended Mexican miner Grupo Mexico's bid to take control of U.S. Copper miner Asarco LLC. TVS Motor advanced nearly 4% after it reported a 11 percent rise in total two-wheeler sales in August.

Hindustan Construction Company tumbled nearly 4% despite bagging an order worth Rs 276.44 crore for the construction of a hydel project in Arunanchal Pradesh. Likewise, Kalpataru Power Transmission ended down 0.55% even as it secured orders worth Rs 1400 crore for transmission and substation projects.

Maytas Infra hit the 5% circuit limit for the third straight day after the infrastructure major IL&FS took over the company as the new promoter on directions from the company law board.

Nagarjuna Construction Company slipped 0.88% despite bagging two orders aggregating Rs. 481 crore. Rolta India fell 3.42% after it launched a new software solution for the worldwide markets.

Tata Tea fell 1.31% on reports it plans to expand its global distribution in the Middle East, South America, South Africa and the Commonwealth of Independent States including Russia, through joint ventures or partnerships.

Ranbaxy Laboratories said its Romanian arm will market Evista, a drug used for treating osteoporosis.
The stock ended down 2.44%.

Austral Coke & Projects said it acquired a 50% stake in Osho Gremach Mining Limitada, Mozambique, through its wholly owned subsidiary. The stock slipped 1.94%.

Oil-marketing companies rose after crude oil prices fell nearly 4% in New York trading on Monday. HPCL rose 2.05%, BPCL edged up 0.84% and IOC added 1.91%.

Prime Minister Manmohan Singh said on Tuesday that the global economic downturn is coming to an end and India would slowly return to normalcy in the months that lie ahead. The rural jobs scheme and other schemes will help minimize the impact of a drought, he said.

Elsewhere, the other Asian markets finished mostly higher on the back of a positive manufacturing report from China, while European stocks reversed their early gains and are currently trading deep in the red, dragged down by banks.

U.S. stocks point towards a negative opening on Wall Street Tuesday morning on apprehensions valuations have overtaken the economic recovery.

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