Key benchmark indices logged modest losses in a highly volatile session of trade led by slide in index heavyweights Reliance Industries and HDFC. The barometer index, the S&P BSE Sensex, lost 139.61 points or 0.37% at 38,018.31, as per the provisional closing data. The Nifty 50 index lost 43.35 points or 0.38% at 11,476.95. The Sensex provisionally regained the psychological 38,000 mark after sliding below that level in intraday trade. Global stocks dropped as heightened worries over international trade conflicts curbed investor appetite for riskier assets.

Domestic stocks nudged higher in early trade. Volatility struck bourses in morning trade as the key benchmark indices cut losses soon after reversing intraday gains. Stocks hovered in a small range with negative bias in mid-morning trade with sentiment taking a hit after data showed that India's Services PMI had risen at slower pace in August. Stocks drifted lower in early afternoon trade. Indices slumped in afternoon trade as selling pressure intensified. Stocks cut losses soon after hitting intraday low in mid-afternoon trade. Bourses extended recovery in late trade.

The S&P BSE Mid-Cap index fell 0.61%. The S&P BSE Small-Cap index fell 0.52%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 1061 shares rose and 1696 shares fell. A total of 173 shares were unchanged.

Kotak Mahindra Bank (down 1.96%), Reliance Industries (down 1.48%), HDFC (down 1.2%), Hero MotoCorp (down 1.03%) and L&T (down 1.03%) were the major Sensex losers.

Most FMCG stocks declined. Britannia Industries (down 2.26%), GlaxoSmithkline Consumer Healthcare (down 3.11%), Godrej Consumer Products (down 4.1%), Hindustan Unilever (down 2.81%), Marico (down 0.8%), Nestle India (down 3.76%), Tata Global Beverages (down 1.56%), Jyothy Laboratories (down 1.22%) dropped. Dabur India (up 2.05%), Bajaj Corp (up 0.01%), Colgate-Palmolive (India) (up 0.01%) and Procter & Gamble Hygiene and Health Care (up 0.42%) rose.

On the macro front, August survey data signalled a slower rise in business activity across India's service sector, primarily driven by the weakest growth in new work in three months. The seasonally adjusted Nikkei India Services Business Activity Index fell from July's 21-month peak of 54.2 to 51.5 in August, signalling the slowest growth in the current sequence. The data was released during market hours today, 5 September 2018.

Overseas, European stocks were trading lower, as renewed concerns over international trade conflicts hampered investors' appetite for riskier assets. Asian stocks were trading lower amid continued pressure in many emerging markets and as trade tensions persisted. US stocks fell yesterday, 4 September 2018, with all major indexes finishing lower, as investors looked ahead to a busy week of trade negotiations and economic data.

Trade tensions were a key focus for investors, with the US reportedly scheduled to restart tense negotiations with Canada that could lead to way to revising the North American Free Trade Agreement. Over the weekend, President Donald Trump threatened to leave Canada out of any new Nafta pact. The president of the country's largest group of labor unions said that Nafta won't work if it doesn't include Canada.

On the macro front, the Institute for Supply Management's manufacturing survey rose to 61.3 in August, its highest level since May 2004. Separately, the IHS Markit reading on August manufacturing came in at 54.7, compared with 55.3 in July.