Benchmarks buckled under heavy selling pressure on Tuesday as wary investors pocketed gains in recent winners ahead of the Union Budget amid lacklustre global leads.
The BSE Sensex sank about 250 points to end at 36,033.73, while the broader NSE Nifty dropped 80 points to 11,049.65.
Brokers said investors took money off the table and held back fresh bets ahead of the Union Budget on February 1.
Market sentiment was also impacted as other Asian markets retreated from record highs, tracking overnight meltdown at the Wall Street after a sell-off in Apple shares.
Investors were also cautious ahead of the US Federal Reserve's two-day monetary policy meeting beginning Tuesday.
The 30-share Sensex, after opening a shade lower at 36,277.12, continued its slide to crack the 36,000-mark and hit a low of 35,993.41 during the day. It finally settled at 36,033.73, down 249.52 points, or 0.69 per cent.
The index had gained 232.81 points on Monday and closed at a record high of 36,283.25.
The Nifty too closed lower by 80.75 points, or 0.73 per cent, at 11,049.65 after hitting a low of 11,033.90.
It had ended at a lifetime high of 11,130.40 on Monday.
“Market slid followed by weaknesses in global markets while investors are likely to utilise the correction as improving domestic macros coupled with earnings growth will benefit in the long run. "The upcoming US Fed policy and India budget will remain the near term catalyst,” said Vinod Nair, Head of Research, Geojit Financial Services.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth Rs 291.86 crore on net basis while domestic institutional investors (DIIs) also picked up equities to the tune of Rs 90.08 crore on Monday, provisional data showed.
Asian Paints was the worst performer among the Sensex components by falling 2.22 per cent, followed by Kotak Mahindra Bank at 2.20 per cent.
Other laggards were Axis Bank, Dr Reddy's, Adani Ports, Reliance Industries, Wipro, ICICI Bank, TCS, Yes Bank, HDFC ltd, Infosys, Tata Steel, Tata Motors, Maruti Suzuki, NTPC, ONGC, Bajaj Auto, Bharti Airtel, ITC and HDFC Bank.
Bucking the trend, Coal India, Hero MotoCorp, Sun Pharma, SBI, IndusInd Bank, HUl and Power Grid finished with gains of up to 1.71 per cent.
Reliance Communications soared 10.46 per cent after the company reported narrowing of consolidated loss to Rs 130 crore for the quarter ended December 2017.
Sector-wise, the BSE consumer durables index was the weakest of the lost, dropping 1.74 per cent, followed by IT 1.07 per cent, teck 1.02 per cent, bankex 0.85 per cent, realty 0.80 per cent, metal 0.63 per cent, healthcare 0.61 per cent, infrastructure 0.56 per cent, auto 0.48 per cent, capital goods 0.36 per cent and FMCG 0.33 per cent.
Oil & gas and PSU indices managed to close in the green.
The broader markets continued to face selling pressure, which pulled down the small-cap index by 1.34 per cent and mid-cap by 0.67 per cent.
Overseas, European stocks were trading lower following sharp losses in Asian bourses and on Wall Street. Key indices like Frankfurt's DAX was down by 0.35 per cent, while Paris CAC 40 shed 0.19 per cent in their late morning deals. london's FTSE fell 0.42 per cent.
In Asia, Japan's Nikkei fell 1.43 per cent and Hong Kong's Hang Seng slipped 1.09 per cent, while Shanghai Composite Index dropped 0.99 per cent.
