At 9:35 am, the Sensex traded 247.83 points - or 0.66 per cent - lower at 37,334.08, while the Nifty was down 61.50 points - or 0.55 per cent - at 11,048.15.

Top percentage laggards on the 50-scrip index at the time were Bharti Airtel, NTPC, Britannia, Mahindra & Mahindra, Maruti Suzuki, HDFC and HDFC Bank, trading between 2.19 per cent and 4.82 per cent lower.

HDFC Bank, HDFC, Infosys and ITC weighed the most on the Sensex.

Market breadth was negative, with 661 stocks trading higher on the BSE and 769 struggling with losses. On the NSE, 626 stocks advanced while 936 declined.

On the other hand, Reliance Industries shares jumped as much as 9.28 per cent to Rs 1,270.00 apiece on the NSE, a day after the conglomerate said Saudi Arabia's Aramco will buy a 20 per cent stake in its oil-to-chemical business by paying $15 billion. Speaking at the company's 42nd Annual General Meeting, Reliance Industries chairman Mukesh Ambani said the group has a clear roadmap to become zero net-debt company in 18 months.

Reliance Industries shares were among the top gainers on both benchmark indexes in first few minutes of trade.

Equities in other Asian markets slumped amid fears about a drawn out US-China trade war, with MSCI's broadest index of Asia-Pacific shares outside Japan skidding 1 per cent, Chinese stocks falling 0.8 per cent, and Hong Kong's main market index tumbling over 1 per cent to a seven-month low. Japan's Nikkei was down 1.5 per cent and on course for its biggest daily decline in a week.

Last Friday, the Sensex and Nifty had ended 0.68 per cent and 0.70 per cent higher respectively, rising for a second straight day. The markets remained shut on Monday for Eid-al-Adha.

The government will release consumer inflation data for the month of July after market hours on Tuesday.