Investors are being cautious ahead of corporate results of the third quarter ended December, analysts said. Infosys will open the Q3 results season next week.

Selling in Bharti Airtel, RIL, Infosys, HUL, TCS, M&M, Bajaj Auto and HDFC weighed down the market. However, buying in ICICI Bank, Tata Motors, HDFC Bank, BHEL, L&T and ONGC contained the fall.

The BSE 30-share index, Sensex, made gains initially but fell soon. It moved up again and touched a high of 16,004.69, before ending the day at 15,882.64 -- down 56.72 points or 0.36 per cent. Yesterday, it had spurted 421.44 points or 2.72 per cent, in addition to 63 point gain on Monday.

The 50-issue NSE index, Nifty, also fell 15.65 points or 0.33 per cent to 4,749.65.

Globally, while Asian markets showed a mixed trend, those in Europe opened weak.

"Volatility was the order of the day. Besides, corporate India will kick start their result season with leading companies Infosys and HDFC announcing their Q3 FY'12 results on January 12 (making investors cautious)," said Shanu Goel Research Analyst Bonanza Portfolio.

"There was profit booking in the market after a sharp rally in the last trading session. Higher deficit and slowdown in economy are major (long term) concerns in the market," said Parag Doctor, Associate VP at Motilal Oswal Securities.

Key indices in China, Hong Kong and South Korea closed with losses, while those in Japan, Singapore and Taiwan made gains. In Europe, except FTSE, markets were trading lower in the afternoon deals.

Meanwhile, data from market regulator Sebi showed that FIIs bought shares worth Rs 325.70 crore yesterday.

In all, 18 out of 30 Sensex scrips closed with losses, while others finished with gains. Bajaj Auto was the top loser with a fall of 4.07 per cent, followed by M&M (4.25 pc), HUL (3 pc), Bharti Airtel (2.95 pc), Hero Motocorp (2.75 pc), DLF (2.25 pc), TCS (1.86 pc), Jindal Steel (1.72 pc), RIL (1.06 pc) and Tata Power (0.97 pc).

However, Tata Motors gained 3.38 pc, BHEL 2.44 pc, Hindalco 2.43 pc, ICICI Bank 2.43 pc and ONGC 1.06 pc.

Among the sectoral indices, BSE-Auto dropped 1.21 pc and the BSE-Teck by 0.88 pct, while BSE-PSU rose 1.73 pc and Capital Goods by 1.10 pc.

In the broader market, Network 18 Media and TV18 Broadcast rallied for the second day -- up 10.67 per cent and 6.68 per cent respectively. They rose 19.90 pc and 19.93 pc yesterday after RIL said that a part of the interest owned by it in the ETV channels is being divested to TV8 Broadcast, a Networl18 Group firm.