Benchmark indices, which began the day on a very strong note, ended the day with cuts of more than 1 per cent.
Global cues were weak, with the European benchmark indices seeing drops of nearly 2 per cent and Dow Futures pointing to lower openings for the US markets.
The Sensex touched an intraday high of 34811.29 and intraday low of 34268.55. The NSE Nifty touched intraday high of 10291.15 and intraday low of 10135.1 points.
The Sensex finally ended the day lower by 421 at 33,948 points, while the Nifty fell 120 points in trade to end at 10,046 points, holding onto the 10,000 points levels.
Pharma stocks were relatively strong in trade, with Sun Pharma ending the day with strong gains, as also Dr Reddy's Labs. SBI, which had a very strong trading session on Monday, ended the day lower by almost 1 per cent.
Among the top Nifty losers in trade were Tata Motors, Wipro and GAIL. Shares in PVR plunged almost 7 per cent, on sustained selling pressure as investors continued to worry over the prospects.
The Nifty Bank index ended the day sharply lower led by losses in heavyweight names like HDFC Bank and ICICI Bank.