Sathish:

Here is a link to an Intel Tech Note that discusses generating sine waves by way of PWM on an Intel MSC-51FX series processor.

Intel Tech Note: Generating Sine Waves With 8051Fx's PWM Generator


From the looking I did in the above linked document I see that for a typical '51 type processor with 12 clocks / cycle and running on a 16MHz crystal the highest feasible sine way is on the order of 3 KHz.

For this reason it may be desirable to use the D/A converter method mentioned by Mikkel. Here is a link to a technical article that will help you understand this technique.

Cypress App Note: CTCSS Carrier Generation with a PSoC Microcontroller

Michael Karas