Indian shares fell more than 2 percent on Tuesday, tracking a steep fall in European equities and as sentiment turned cautious ahead of the expiry of monthly derivatives contracts later this week. Both the benchmark BSE index and the broader NSE index lost 2.07 percent each. The indexes gained as much as 0.56 percent each earlier in the session.
The stocks rose in early trading on upbeat Asian markets as Wall Street bounced back overnight and the European Central Bank said it was prepared to ease monetary policy further.
However, volatility crept back in ahead of the expiry of the September derivatives contracts. Indian markets will be shut on Friday on account of a local holiday.
"Interest is missing primarily because of a truncated week and the F&O expiry day after tomorrow. Volatility will be high plus 8,000 levels (on the NSE)," Gaurang Shah, vice president at Geojit BNP Paribas, said.
Defensive stocks such as IT, healthcare and consumer staples gained, while financials and resources stocks lagged.
Infosys rose 2.7 percent, HCL Tech gained 2 percent while Wipro was up 1.6 percent.
Among healthcare stocks Sun Pharma was up 0.7 percent while Aurobindo Pharma gained 2.95 percent.
Meanwhile, Blue chip stocks witnessed some selling pressure. Reliance was down 1.8 percent, Larsen & Toubro lost 1.4 percent and Bharti Airtel fell 1.9 percent.