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Benchmark indices continue to trade weak weighed down by IT, metal and oil shares. At 13:30, the Sensex was lower by 86 points at 20,127 and the Nifty plunged by 29 points at 5,976.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Monday. Foreign institutional investors (FIIs) sold shares worth a net Rs 735.73 crore on Monday, as per provisional data from the stock exchanges.
Adds Devangshu Datta, independent technical analyst, "Seems like a downtrend has been strongly established due to global factors. If support at the 200 DMA levels of 5950-5975 is broken, the market could fall quite a lot further over ext few sessions. My advice would be to go short with a stop loss at 6015 (futures price). Add to the position if Nifty support 5945-5955 is broken."
On the global front, Asian shares skidded on Tuesday while the dollar struggled to keep its footing, after disappointing data cast doubt on the strength of the U.S. economy and gave investors little reason to hope for stability in emerging markets after their recent rout.
MSCI's broadest index of Asia-Pacific shares outside Japan fell about 1.4 percent, touching its lowest level since early September at one point.
Back home, the rupee was trading weak due to dollar buying by importers and weakness in other emerging market currencies globally against the dollar.
Emerging markets are under pressure after data showing US manufacturing activity slowed sharply raises risk aversion.
At 13:25 pm, the rupee was trading at Rs 62.66 compared with previous close of Rs 62.58.
On the sectoral front, BSE IT index has slumped by over 2% followed by counters like Oil & Gas and Metal, all declining by 1% each. However, BSE Consumer Durables index is up by nearly 1%.
IT shares which had remained range bound in the previous sessions witnessed profit taking after weaker-than-expected manufacturing data in the US. Infosys, TCS and Wipro are down 1-3% each. All these companies earn most of their revenues from exports to the US.
Other notable losers are M&M, GAIL, BHEL, Dr Reddy’s Lab, Hindalco and Sun Pharma.
On the gaining side, Bharti Airtel, Tata Motors, NTPC, SBI and Cipla have gained between 1-3%.
The broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are marginally down.
The market breadth in BSE remains weak 1,360 shares declining and 923 shares declining.
