Benchmark indices were trading lower, as global markets like the Japanese Nikkei entered bear territory, while the S&P 500 and the Dow Jones were very close to bear territory.
A 20 per cent fall from higher levels, is considered as bear territory and can sentimentally impact stocks.
US Futures also pointed to lower openings and if the benchmark Standard & Poor 500 index falls below the 20% decline, it would be the first since 2009, a period according to Bloomberg that spans two presidential administrations and three Federal Reserve chairs.
The Sensex was last seen trading lower by 340 points at 35,129 points, while the Nifty dropped 102 points in trade at 10,561 points. Leading the set of losers was Hindustan Unilever after the National Anti-Profiteering Authority (NAA) slapped a hefty penalty on the company for not passing the GST price cut benefits to consumers.
Shares in oil marketing companies were the only ones from the Nifty that managed to gain ground, after a sharp fall in the price of crude oil. IT and pharma stocks were seeing weakness, after sharp gains in the rupee. The losers from the space were Sun Pharma, Lupin, Infosys, Tata Steel and Tata Consultancy.
Meanwhile, most of the global markets were closed and volumes were thin. The Japanese Nikkei was trading with marginal gains, after dropping as much as per cent on Dec 25, 2018.
The Rupee opened higher at 69.90 to the dollar against Monday's close of 70.14 after Brent crude dropped below $50/Barrel.