Asia has opened largely in the green ahead of a raft of Chinese data due during the day.
Sensex lost 76 points to end at 25,589 while Nifty shed 23 points to end at 7,649.
Auto and realty shares were among the top Sensex gainers.
Investors booked profits at higher levels after the Sensex and Nifty hit all-time highs in the previous session.
Sensex ended at 26,272 up 125 points and Nifty ended at 7,831 up by 35 points.
Twenty-seven South Asian workers, including 24 Indians, were arrested on Monday for alleged rioting in Singapore's worst outbreak of violence in over 40 years even as the prime minister warned to use "full force of the law" against trouble-makers.
What China's market crash means for India
Several Sensex stocks hits 52-week low in intra-day trade on Monday with financials leading the decline.
The 30-share Sensex ended up 248 points at a record closing high of 27,346.
Tata Steel, SBI, L&T and Sun Pharma advanced 2-5% each.
Markets recovered in late trades, amid firm European cues, led by rebound in financials and gains in IT shares.
Jindal Steel and Power was the top loser down 10% followed by Hindalco, Tata Steel, Tata Power which ended down between 0.5-3% each.
Markets extended losses to end 1.5% down on Tuesday, amid weak global cues, after investors turned cautious ahead of key economic data and booked profits in rate sensitive shares while the further fall in the rupee continued to weigh on investor sent.
The 30-share Sensex ended down 414 points at 25,481 and the 50-share Nifty slipped 119 points at 7,603.
Modi government must push reforms at a fast pace to restore growth.
Benchmark share indices ended at record closing highs, amid a volatile trading session on Monday, with IT majors leading the gains.
Markets surged on hopes that the exit polls would show that the BJP winning majority in the general elections.
Markets end higher ahead of Fed outcome, China stimulus
Malaysian authorities are probing new information that the missing plane with 239 people on board dropped to an altitude of 5,000 feet or possibly lower to evade radar detection after it turned back midair.
Investors booked profits at higher levels despite the growth oriented Budget.
China's obsession with exports and electronics assembly can also be attributed to having learned from the Singaporean textbook.
'Studying History, we come close to all of the messiness of human life -- we understand what motivates people, what makes them get along or go to war, what dreams they had for themselves and their futures.'
Rescuers found 30 bodies with 5 of them still strapped to their seats as multi-national teams equipped with sophisticated equipment narrowed the search to a 5 sq km area of the choppy Java Sea where some debris of the ill-fated AirAsia jet have emerged.
The 30-share Sensex gained 321 points to end at 26,430 and the 50-share Nifty surged 100 points to end at 7,879.
'If one thing seemed clear in this week of very uneven tennis in Melbourne though, the much celebrated golden age of tennis may be over.'
Sensex ended above 26,000 led by telecom shares amid TRAI's spectrum sharing norms.
FIIs pump in Rs 2,075 crore in past three trading sessions.
Roger Federer's straight sets victory over Richard Gasquet in the Davis Cup final against France on Sunday not only made Switzerland only the 14th nation to win tennis's prestigious trophy, but also completed the final piece in the Swiss's puzzle.
Rajeev Srinivasan on how India has continued to disappoint, but could outdo Singapore one day.
'It was almost as though there was widespread relief that the defence bureaucracy, and the minister, could find someone willing to shoulder the blame for everything that had gone wrong with the services under Antony's charge -- the poor preparedness of the forces, slow acquisitions caused by indecision, cancellation of contracts and whimsical blacklisting of defence contractors over the tiniest suspicion that they may have paid speed money or kickbacks.'