Both the benchmark BSE sensex and broader NSE Nifty fell more than a per cent in the early trade.
Here are the top factors responsible for the slide:
* Weak global cues
Asian shares dropped on Tuesday due to concerns about new pandemic lockdowns in Europe and possible delays in fresh US stimulus. A new round of pandemic business restrictions would threaten a nascent recovery and further pressure equity markets.
Global stock markets and US futures tumbled on Monday due to US-Chinese tension over technology and security and the prospect of tougher restrictions on public life in Europe to limit coronavirus cases.
US stocks have tumbled over the past three weeks as investors dumped heavyweight technology-related stocks following a stunning rally that lifted the S&P 500 and the Nasdaq to new highs.
* Surge in Covid-19 cases
In India, total novel coronavirus cases touched 5.49 million as of Monday, while the Covid-19 death toll in the United States approached 200,000-mark. Both the domestic indices witnessed significant selling pressure as a rise in coronavirus cases at home and abroad dented investor sentiment.
* Metal stocks
Negative cues from global markets and foreign fund outflows pushed the metal stocks lower with sub-indice Nifty Metal falling over 5 per cent in intra-day trade. On BSE, Tata Steel emerged as the major laggard, falling over 3 per cent.
“Indian benchmark indices succumbed to profit booking. It was in sync with global cues which turned negative following surge in (Covid-19) infections in various countries including in Europe,” an analyst said.
In the previous session, sensex had ended 812 points or 2.09 per cent lower at 38,034, while Nifty tumbled 254 points or 2.21 per cent to finish at 11,251.
Meanwhile, exchange data showed that foreign institutional investors sold equities worth Rs 539.81 crore on a net basis on Monday.
* Financial stocks tumble
Banking and financial stocks fell after it was learnt that several global banks moved large sums of allegedly illicit funds over a period of nearly two decades, despite red flags about the origins of the money. The reports were based on leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen).
(With agency inputs)