An investor walks past an electronic trading screen at a brokerage in Fuyang, Anhui province, Nov 27, 2015. [Photo/IC]

Stock prices fell on Tuesday as liquidity tightened in the capital market ahead of a flurry of initial public offerings.

Analysts are apprehensive that investors may refrain from fresh purchases and set aside the funds for investing in new floats next week.

Sentiment was also hit by renewed concerns about macroeconomic uncertainties in domestic and global markets.

The Shanghai Composite Index dropped by 1.89 percent to 3,470.07 points, while the CSI 300 Index, which tracks large listed firms in Shanghai and Shenzhen, fell by 1.75 percent to 3,623.02 points.

Major index futures contracts also sank by 1.5 percent, reflecting a prudent outlook for share prices.

Shares in airport and transportation stocks were among the handful of sectors which rose on the day, reflecting the solid demand for transport expected as the end of year approaches, according to data from Shanghai Wind Information Co Ltd. Agriculture, chemicals and entertainment shares slumped an average 3 percent, said the Wind data.

Researchers said the falls were a direct result of inactive trading and lack of liquidity in the A-share market, as huge sums - estimated as high as 2 trillion yuan ($311.7 billion) - were frozen after investors sold off holdings, deposited proceeds, and suspended trading, a week before they can apply to buy new shares being offered through upcoming IPOs.

"The lack of liquidity in the market is a natural result of small investors betting on new shares, after selling off the old ones which did not perform well," said a research report by Cinda Securities Co.

Small investors questioned in Shanghai said they believed that buying new shares could be a good chance to gain almost "guaranteed", risk-free returns.

"After four months of IPO suspension and at the end of such a turbulent year of volatile market, I do look forward to getting an opportunity to buy new shares," said 52-year-old Shanghai investor Zhang Suqiang.

"I sold my old shares to raise some 3 million yuan and get ready to apply for new share allocation. It is very difficult, however, to get a chance through the drawing system, so my money is frozen, defrozen and frozen again as I continue to reapply."

Brokerages said they are also noticing a cooling down in "concept-related" investments, those not classified within a sector, but associated with areas such as new policies, hot-button issues or national plans.

"For those investors who prefer to buy shares benefitting from concepts, December offers little prospect," said Shao Meijing, a manager with Guoyuan Securities.