The Indian equity indices ceded their initial gains to close Tuesday's trade session on a negative note, as uncertainty loomed over government formation in Karnataka.
According to analysts, panic selling erupted after the poll results showed that no single political party had reached the half-way mark for government formation, despite the fact that early trends had indicated a clear majority for the Bharatiya Janata Party (BJP).
The party, however, fell a few seats short of the clear majority mark. Election trends earlier in the day had led the barometer Sensex of the BSE to gain over 400 points.
Even the broadly subdued Asian indices and the disappointing macro-economic inflation data points released on Monday dented investor sentiments.
It touched a high of 35,993.53 points and a low of 35,497.92 during the intra-day trade. The BSE market breadth was bearish with 1,611 declines and 1,028 advances.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed in the negative territory. It ended at 10,801.85 points -- down 4.75 points or 0.04 per cent -- from the previous close of 10,806.50 points.
"Markets ended with marginal losses after a volatile session. The index initially surged higher as trends showed BJP taking a lead in Karnataka Assembly elections," said Deepak Jasani, Head of Retail Research at HDFC Securities.
Anand Shah, Deputy CEO and Head of Investments at BNP Paribas Mutual Fund India said that apart from the uncertainty in Karnataka's politics, the increase in inflation rate also caused concern among the investor community.
The election results not only dampened the equity market sentiments but also dragged the Indian rupee down by 56 paise to close at its 15-month low of 68.08 against the US dollar from its previous close at 67.52 per greenback.
In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrips worth Rs 518.47 crore, while the domestic institutional investors bought stocks worth Rs 531.33 crore.
On the other hand, the S&P BSE auto index declined the most, by 176.56 points, followed by the healthcare index, which dropped by 60.14 points and the capital goods index that ended 51.37 points lower.
The major gainers on the Sensex were Tata Steel, up 2.29 per cent at Rs 624.05; Power Grid, up 2.27 per cent at Rs 213.80; Tata Consultancy Services, up 1.33 per cent at Rs 3,482.45; Asian Paints, up 0.89 per cent at Rs 1,310; and HDFC Bank, up 0.85 per cent at Rs 2,038.35 per share.
The top losers were Tata Motors, down 4.29 per cent at Rs 310.25; Tata Motors (DVR), down 4.27 per cent at Rs 182.75; Coal India, down 2.11 per cent at Rs 264; State Bank of India, down 1.87 per cent at Rs 248.60; and Sun Pharma, down 1.22 per cent at Rs 468.25 per share.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)