S&P BSE Sensex and NSE Nifty 50 Indexes extended losses led by declines in HDFC, HDFC Bank, Infosys, ITC, Larsen & Toubro, ICICI Bank and Tata Consultancy Services. Investors remained wary in the absence of any announcement about a government fiscal stimulus package and ahead of key inflation data. The Sensex fell as much as 611 points and the NSE Nifty 50 Index dropped below 10,950. The selloff was so intense that only three shares in the Sensex were trading higher while 42 shares were trading lower in the Nifty 50 basket of shares.

The fall in domestic markets was in line with declines in broader Asia, as fears about a drawn out Sino-US trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours.

As of 2:58 pm, the Sensex fell 565 points or 1.5 per cent to 37,017 and the NSE Nifty 50 Index plunged 1.5 per cent or 166 points to 10,944.

The rupee also depreciated against the dollar to breach 71 per dollar mark for the first time in six months.

All the 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty Auto Index's 3.8 per cent fall after the country's passenger vehicle sales fell for the ninth straight month in July, an auto industry body said on Tuesday, amid a deepening crisis in the country's automobile sector that has triggered large-scale job losses.

Sales of passenger vehicles to car dealers fell 30.9 per cent to 200,790 units in July, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. Commercial vehicles sales fell 25.7 per cent to 56,866 units, SIAM said.

Nifty Bank, Financial Services, FMCG, Information Technology, PSU Bank and Private Bank sector gauges also dropped over 1.5 per cent each.

Mid- and small-cap shares were also witnessing selling pressure as the Nifty Midcap 100 Index dropped 1.5 per cent and the Nifty Smallcap 100 Index plunged 0.9 per cent.

Yes Bank was top loser in the Nifty 50 basket of shares, the stock fell 7.7 per cent to Rs 75.80. Mahindra & Mahindra, Bharti Airtel, HDFC, Grasim Industries, Eicher Motors, ITC, Maruti Suzuki, NTPC and Tech Mahindra were also among the losers, down between 3.2 and 4.8 per cent each.

On the flipside, Reliance Industries shares saw their biggest intraday rise in a more than a decade on Tuesday, after it set a target to reach zero net debt within 18 months and vowed to reward shareholders with higher dividends and periodic bonus issues.

Reliance Industries surged as much as 12 per cent to Rs 1,302.

Indiabulls Housing Finance, Sun Pharma, GAIL India, Hindalco, Zee Entertainment and Titan were also among the gainers.

The overall market breadth was extremely negative as 1,131 shares were declining while 601 were advancing on the NSE.

(With agency inputs)