Sensex choppy after China sell-off, earnings awaited

MUMBAI (Reuters) - Indian stock markets swung between small gains and small losses on Tuesday as some blue chips recovered from steep falls in the previous session, but overall market sentiment remained cautious due to continued worries about China's markets.

Indian shares fell more than 2 percent on Monday, with the broader NSE Nifty posting its biggest single-day percentage fall in over four months, after Chinese shares posted steep falls on the back of weak economic data.

The caution over global markets comes at a time when domestic investors are concerned about the weak state of India's corporate earnings.

UBS said corporate earnings consensus for FY16, FY17 and FY18 still looked optimistic, and expected about an 8 percent cut to earnings forecasts this year.

Tata Consultancy Services will kick start the earning season on Jan. 12.

"After the fall yesterday there is some amount of caution that traders are exercising," said Deven Choksey, managing director at KR Choksey Securities.

The Nifty was up 0.13 percent at 0734 GMT while the benchmark BSE index was trading 0.07 percent higher.

Gains were led by blue-chips stocks that fell on Monday. Reliance Industries rose 1.3 percent after falling 2 percent in the previous session.

Larsen & Toubro rose 0.76 percent after losing 2.6 percent on Monday.

But Mahindra and Mahindra trimmed gains to trade 0.6 percent lower after the Supreme Court upheld a December ruling that temporarily banned the sale of large diesel cars in New Delhi. The stock rose as much as 2.37 percent earlier.

Shares in Apollo Hospitals fell as much as 1.22 percent on media reports that income tax officials had conducted raids on some of its offices.

(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)