The Sensex was down 58 points in trade, while the Nifty was down 33 points in trade as banking stocks cracked following the RBI measures.
Axis Bank fell 4 per cent in early trade, while ICICI Bank was down 3 per cent and HDFC Bank was down 2.3 per cent. IndusInd was badly hit in trade dropping 6.69 per cent lower.
The already battered PSU banking stocks also had a bad day with notable losers from the space being Punjab National Bank, Union Bank of India, IDBI Bank and Andhra Bank.
The technology and the FMCG stocks continued to do well with Infosys continuing to gain along with TCS, while FMCG stocks ITC and Hindustan Unilever were resilient in trade.
Shares of Pharma major Wockhardt came crashing down once again, following the huge selling pressure witnessed on Monday. The stock was down 8.35 per cent in trade.
HeroMotor Corp was down 1.5 per cent ahead of its results to be declared later today. However, other auto stocks also lost ground with notable losers being Escorts and Bajaj Auto.
Meanwhile, markets in Asia were trading mixed with the Shanghai Composite and Hong Kong's Hang Sang trading lower, while the Korean Kospi gained ground.