Profit-booking, coupled with doubts over the central government's ability to push through key economic legislations during the upcoming parliament session, dragged the Indian equity markets lower during the late-afternoon trade session on Tuesday.
The weak exports figures for January and dwindling rupee value also subdued investors' sentiments.
Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) declined by 356 points or 1.51 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the red. It was lower by 116 points or 1.61 percent at 7,047.30 points.
The Sensex, which opened at 23,688.61 points, was trading at 23,197.66 points (2.45 p.m.) -- down 356.46 points or 1.51 percent from the previous day's close at 23,554.12 points.
During the intra-day trade, the Sensex touched a high of 23,692.08 points and a low of 23,178.53 points.
The BSE market breadth favoured the bears -- with 1,967 declines and only 569 advances.
Initially, both the indices of the Indian equity markets opened on a positive note, in-sync with their Asian peers and Monday's sharp gains.
Besides, a rise in crude oil prices, which climbed to over the $30 a barrel mark (one barrel is equal to 159 litres), led investors to chase stock prices higher.
However, profit booking on the back of gains made on last Friday and Monday dragged the markets lower.
Moreover, investors' confidence was eroded due to continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations.
The upcoming session assumes significance as major economic legislations like bankruptcy code and Goods and Services Tax (GST) Bill will be taken up for approval by the upper house of parliament.
In addition, dwindling exports numbers and a weak rupee dented the equity markets.
The Indian rupee opened on a weak note, down seven paise to 68.14 against a US dollar from its previous close of 68.06-07 to a greenback.
On the exports front, Monday's late evening macro data release showed a slump of 13.6 percent in January in dollar terms over the same month a year ago.
"Profit bookings on the back of last two sessions gains and fears of a washout of the upcoming parliamentary session led to the decline in the markets," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets traded on a negative note, post the sharp rise seen on Monday, which indicated a consolidation mode before the markets embarks on its next trend.
"Further, our markets are underperforming its Asian peers which are trading with handsome gains. Broader markets have also declined, under-performing the headline indices," Shankar noted.