Indian shares fell for the fourth consecutive session on Tuesday, pulled down by oil marketing companies following a rating downgrade by brokerage Nomura, as investors remained jittery over macro concerns.
A string of defaults at a major non-banking financial company (NBFC) has battered the sector amid a liquidity crunch, while higher crude prices and weaker rupee continue to weigh on the trading sentiment.
Asian shares also dropped as earnings season nerves in the U.S. dented Wall Street, while a mix of negative drivers from Saudi Arabia's diplomatic isolation to concerns over Italy's budget and Brexit talks depressed the sentiment.
"Earnings growth (in India) is quite okay, but market is still not able to understand the bottom of this NBFC challenge. Its keeping market on tenterhooks," said Harendra Kumar, managing director, Elara Securities.
He added that the recent trend of selling pressure in the last hour could be due to the upcoming expiry of the futures and options contract.
The broader NSE index was down 0.29 percent at 10,215.15 as of 0513 GMT, while the benchmark BSE index was 0.21 percent lower at 34,061.37.
Oil marketing companies fell with Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd and Indian Oil Corp down about three percent each. Nomura downgraded all three stocks to 'neutral' from 'buy' citing concerns over confidence on marketing reforms.
Earnings season is expected to get gather steam with index heavyweights ICICI Bank, Wipro Ltd and Dr. Reddy's Laboratories scheduled to report September quarter results later this week.
Asian Paints Ltd was the top percentage loser on the NSE index, down as much as 5.8 percent, after its second-quarter profit missed estimates on Monday.
IT stocks were among the other losers with the Nifty IT index down 1.3 percent. HCL Technologies Ltd, down marginally, is expected to report its quarterly results later in the day.