Equity benchmarks declined in initial trade on Tuesday amid an overall weak trend in the global markets as investors adopted a cautious approach ahead of the Union Budget presentation and interest-rate decision from the Federal Reserve.

Also, continuous foreign funds outflow played spoilsport for the markets.

The 30-share BSE benchmark Sensex declined 203.74 points to 59,296.67. The broader NSE Nifty dipped 52.8 points to 17,596.15.

From the Sensex pack, Tech Mahindra, Larsen & Toubro, Tata Consultancy Services, HCL Technologies, Nestle, Infosys, Bajaj Finance, Asian Paints and Bajaj Finserv were the major laggards.

Power Grid, Mahindra & Mahindra, Maruti, Bharti Airtel, State Bank of India, Reliance Industries, UltraTech Cement and Titan were among the winners.

Elsewhere in Asia, equity markets in Seoul, Tokyo, Shanghai and Hong Kong traded lower.

Markets in the US had ended in the negative territory on Monday.

"Caution will prevail as traders brace for interest-rate decision from the Federal Reserve, and the Union Budget for 2023-24, both scheduled to be announced on Wednesday. Another major area of concern has been the persisting FII selling. Even as markets rebounded in late trades yesterday, FIIs sold shares worth Rs 6,793 crore in the domestic markets on Monday," said Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd.

The Sensex had climbed 169.51 points or 0.29 per cent to settle at 59,500.41 on Monday. The Nifty had gained 44.60 points or 0.25 per cent to end at 17,648.95.

International oil benchmark Brent crude was marginally higher by 0.02 per cent to USD 84.92 per barrel.

Foreign Institutional Investors (FIIs) offloaded shares worth Rs 6,792.80 crore on Monday, according to exchange data.