While the Sensex ended 67 points lower at 40,821.30, the broader Nifty settled 36.05 points lower at 12,037.70. The 50-scrip Nifty50 had hit its life-time high of 12,132.45, for the first time after June.
Telecom stocks also ended with heavy losses after a government official was reported saying that the Committee of Secretaries (CoS) formed to suggest relief measure for struggling telecos, has been disbanded.
"Nifty finally managed to touch new high today on the back of strong global cues, FII buying and improvement in market sentiments post slew of government reforms," said Siddhartha Khemka, Head - Retail research, Motilal Oswal Financial Services Private.
Khemka added that the Nifty50 valuation at 22x FY20 is not cheap, but the current momentum can sustain in the near term on the back of liquidity flows and positive sentiments.
The BSE Telecom index ended nearly 5 per cent lower. Bharti Airtel lost over 4 per cent and Vodafone Idea tanked 10 per cent.
Dissolving the CoS would mean that any further relief for the telecom industry may only come from the court in the adjusted gross revenue (AGR) case and the two-year moratorium would be all the government is ready to offer at this point.
Zee stocks on Tuesday fell as much as nine per cent, but settled over 7 per cent lower at Rs 318.55 apiece after Subash Chandra on Monday stepped down chairman of Zee's board.
The top gainer on Tuesday were ICICI, advancing 2.62 per cent followed by IndusInd Bank, Tata Steel, ITC and HDFC and the top lowers on the BSE were Bharti Airtel, losing nearly 5 per cent followed by Tata Motors (DVR), Power Grid, Sun Pharma and Mahindra and Mahindra.
( With inputs from IANS )