Indian shares edged lower in topsy-turvy trade on Tuesday, a day after the country's retail inflation hit a six-month high and investor sentiment was hurt by deteriorating Sino-U.S. trade talks.
Annual retail inflation in April was 2.92%, up from the provisional 2.86% in the previous month, keeping hopes alive for a key interest rate cut in June.
"We are expecting RBI to cut the policy rate in June, but ongoing market and geopolitical volatility could cause the INR to weaken and oil prices to spike, getting in the way of a dovish central bank," Radhika Rao, economist at DBS, said in a note.
Broader Asian peers also slid after China said it would impose higher tariffs on $60 billion of U.S. goods following Washington's decision to hike its own levies on $200 billion in Chinese imports.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.27%.
The broader NSE Nifty was down 0.17% at 11,129.70.17 as of 0454 GMT, while the benchmark BSE Sensex fell 0.1% to 37,054.26.
Vodafone Idea Ltd fell as much as 5.88% after the telecoms company said its subscriber base dropped on Monday.
Nifty IT index was down 0.75%, with Tech Mahindra Ltd and Infosys Ltd down 1.6% and 1.1% respectively.
Among gainers, Nifty's pharma index rose 0.62%, led by Sun Pharmaceutical Industries Ltd's 3.2% gain.
Sun Pharma recorded its worst session in nearly two years on Monday, on a day when the pharma index closed 4.37% lower after U.S. states filed price-fixing lawsuit against Teva, along with 19 other drug companies accusing the Israeli co of inflating generic drug prices.