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Indian shares closed lower on Tuesday, dragged by auto stocks on mixed sales data in September, while concerns over elevated interest rates also weighed on sentiment.

The NSE Nifty 50 index settled 0.56% down at 19,528.75, while the S&P BSE Sensex fell 0.48% to 65,512.10.

Auto stocks fell 1.20%, dragged by Eicher Motors shedding 2.68%, among the most on the blue-chip Nifty 50, after its September motorcycle sales fell 4%.

Escorts Kubota, too, lost 1.73% after logging an 11.2% year-on-year decline in tractor sales in the month.

State-run oil producer ONGC lost 3.78% and dragged the energy index 1.28% lower. The stock had gained 2.5% over the last two sessions.

Asian equities slid to their lowest in 2023 after hawkish comments from U.S. Federal Reserve Chair Jerome Powell and Vice Chair for Supervision Michael Barr reignited worries of a prolonged high interest rate regime. [MKTS/GLOB]

"The risk-off sentiment in the markets has been triggered by the slide in global equities on U.S. rate worries," said Aishvarya Dadheech, chief investment officer at Fident Asset Management, adding that the "correction in small- and mid-cap space is likely after the recent run-up".

Dadheech, however, expected the benchmarks to remain resilient due to the rotation of funds from small- and mid-caps to large-caps.

Small- and mid-caps rose 0.53% and 0.18% on Tuesday. They have gained ~32% and ~29%, respectively, in 2023 so far, outperforming an 8% rise in the Nifty 50.

"While select pockets in domestic equities have become overheated, festive demand and September-quarter earnings are likely to support markets and arrest the selling pressure," said Saurabh Jain, assistant vice president, research at SMC Global Securities.

High-weightage financials lost 0.39%. Among individual stocks, Vedanta gained 3.68% after the Indian miner announced a split into six separate businesses.

HeidelbergCement India jumped 7.04% on a report of acquisition talks by JSW Cement.