The markets ended lower amid a volatile trading session on Monday after profit taking was seen across the board because of growth concerns.
Citing high fiscal deficit and renewed weakness in external demand, Morgan Stanley today lowered India's growth forecast to 5.1 per cent for the current fiscal, from its earlier estimate of 5.8 per cent.
The Sensex ended lower by 45 points at 17,384 and the Nifty has slipped 5 points at 5,254 levels.
Meanwhile, the Asian markets ended higher after US Federal Reserve Chairman Ben Bernanke kept the door open for further stimulus if needed, but gains were capped by weak economic indicators across the region and caution over US data due later this week.
The Hang Seng advanced 77 points or 0.4 per cent to close at 19,559, Shanghai Composite closed higher by 12 points at 2,059 and the Taiwan Weighted ended up 0.7 per cent or 53 points at 7,450. While the Nikkei closed weaker by 0.6 per cent at 8,784 levels.
The European markets were trading on a flat note. The CAC 40, DAX and FTSE were up 0.3-0.5 per cent each after weak data from China highlighted the poor health of the world economy, keeping alive talk of action from the world's major central banks.
Calling for immediate policy action by the government, it warned that in the absence of such a step the GDP growth could slide even deeper to 4.3 per cent in 2012-13.
Jindal Steel was the top loser among the Sensex stocks, it slipped 2.2 per cent to Rs 344. Tata Power [ Get Quote ], Tata Motors [ Get Quote ], Tata Steel [ Get Quote ], ONGC [ Get Quote ], Mahindra & Mahindra, Reliance Industries [ Get Quote ], Dr Reddy's Labs, HDFC Bank [ Get Quote ], Wipro [ Get Quote ], Sun Pharma [ Get Quote ], TCS [ Get Quote ], ICICI Bank [ Get Quote ] and HUL wee also among the laggards from the heavyweight space.
On the other hand, Bajaj Auto [ Get Quote ] was the top Sensex gainer, up 3 per cent to close at Rs 1,664. Coal India, Cipla, Maruti Suzuki, BHEL, Larsen & Toubro, Hero MotoCorp and Bharti Airtel [ Get Quote ] were also among the notable gainers.
On the sectoral front, realty, oil & gas, bankex, metal, healthcare, teck, IT, FMCG and PSU indices were down 0.1-1 per cent each. At the same time, capital goods, consumer durables, auto and power indices ended on a flat note with a positive bias.
Aviation shares such as Jet Airways [ Get Quote ] and SpiceJet fell more than 4 per cent each after the state-owned oil marketing companies hiked jet fuel price by 7.6 per cent from Friday midnight, due to firm international oil prices and weakening of rupee against dollar.
Aurobindo Pharma [ Get Quote ] rallied 7 per cent to Rs 118 on reports that the US drug regulator is expected to inspect company's two manufacturing facilities in Andhra Pradesh during September-December.
Selan Exploration Technology [ Get Quote ] soared 11 per cent to Rs 294 after the company announced buyback of its own equity shares from existing shareholders other than promoters.
Bilcare rallied 10 per cent at Rs 171 on reports that United Drug has completed the acquisition of the UK and US clinical services of Bilcare Global Clinical Supplies from the company.
Shares of Network18 Group companies Network18 Media and Investments and TV18 Broadcast ended weaker by more than 4 per cent each after these companies fixed the price of their rights issues at a discount to their closing prices.
The broader markets ended on a flat note with BSE mid-cap and small-cap indices advancing 0.1 per cent each respectively.
The overall breadth is neutral as 1,424 stocks advanced while 1,392 declined.