A bout of volatility was witnessed as the key barometers bounced back in early afternoon trade. At 12:22 IST, the barometer index, the S&P BSE Sensex, was up 42.20 points or 0.11% at 37,627.71. The Nifty 50 index was up 10.90 points or 0.10% at 11,388.65. Sentiment continued to be fragile as US-China trade tensions took a renewed toll on investor appetite for risky assets.

Overseas, Asia markets were mixed on Tuesday following an escalation in trade tensions between the United States and China. US stocks closed lower Monday, with the S&P 500 and the Dow snapping multi-day win streaks.

President Donald Trump will impose 10% tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25% at the end of the year, according to a Monday announcement. The White House removed about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals and other products such as bicycle helmets and high chairs. Beijing has already warned that it will retaliate against the measures.

The US has already levied tariffs on $50 billion worth of Chinese products. Beijing responded with measures targeting $50 billion on American goods, raising fears about damage to the US farm industry. Earlier this month, reports suggested that the US was seeking to restart trade talks with China.

Meanwhile in the US, the New York Fed's Empire State index fell 7 points to 19 in September.

Among secondary barometers back home, the BSE Mid-Cap index was down 0.18%. The BSE Small-Cap index was down 0.24%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1108 shares rose and 1266 shares fell. A total of 163 shares were unchanged.

Most IT shares declined. Persistent Systems (down 1.4%), Tech Mahindra (down 1.34%), Oracle Financial Services Software (down 1.13%), Infosys (down 0.68%), MindTree (down 0.05%), Hexaware Technologies (down 0.02%) and MphasiS (down 0.02%), edged lower. TCS (up 0.21%), HCL Technologies (up 0.40%) and Wipro (up 0.56%), edged higher.

Pharmaceutical shares were mixed. Dr Reddy's Laboratories (up 1.97%), IPCA Laboratories (up 1.57%), Divi's Laboratories (up 1.48%), Glenmark Pharmaceuticals (up 1.16%), Cadila Healthcare (up 1.01%), Cipla (up 0.85%), Piramal Enterprises (up 0.64%) and Sun Pharmaceutical Industries (up 0.63%), edged higher. Lupin (down 0.13%), Strides Shasun (down 0.2%), Aurobindo Pharma (down 0.39%), Alkem Laboratories (down 0.84%), Wockhardt (down 0.93%) and GlaxoSmithKline Pharmaceuticals (down 1.4%), edged lower.