Reuters Market Eye - The BSE Sensex falls 0.7 percent after hitting its highest intraday level since November 2010 on caution ahead of the October 17 deadline to lift the U.S. debt ceiling.
Meanwhile, the Nifty falls 0.83 percent, after earlier hitting its highest intraday level since May 2013.
Indian markets are closed on Wednesday for a public holiday.
Banking stocks fall as odds of a rate hike in October are seen to have increased after data on Monday showed both consumer and wholesale inflation accelerated last month.
HDFC Bank Ltd is down 1.5 percent ahead of its September quarter results later in the day while ICICI Bank Ltd falls 1.4 percent.
Tata Motors Ltd falls 1.7 percent after hitting an all-time high of 393.30 rupees on Monday.
(Reporting by Abhishek Vishnoi)