Benchmark equity indices declined after beginning the trade on a positive note on Tuesday as investors preferred to stay on the sidelines ahead of key events due later this week such as the interim budget and the US Fed interest rate decision.
Also, decline in the stocks of Bajaj Finance and Reliance Industries pulled the markets lower.
The 30-share BSE Sensex declined 94.08 points to 71,847.49. The Nifty dipped 31.6 points to 21,706.
Among the Sensex firms, Bajaj Finance fell nearly 4 per cent after its December quarter earnings failed to cheer investors.
Bajaj Finserv, UltraTech Cement, Titan, NTPC, Larsen & Toubro and Reliance Industries were among the other major laggards.
Hindustan Unilever, JSW Steel, Wipro and Tata Motors were among the gainers.
In Asian markets, Seoul and Tokyo were trading in the positive territory while Shanghai and Hong Kong quoted lower.
The US markets ended higher on Monday.
The BSE benchmark jumped 1,240.90 points or 1.76 per cent to settle at 71,941.57 on Monday. The Nifty climbed 385 points or 1.80 per cent to 21,737.60.
"Key upcoming events include the FOMC (Federal Open Market Committee) rate decision, interim budget, and the US jobs report," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Global oil benchmark Brent crude climbed 0.22 per cent to USD 82.58 a barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 110.01 crore on Monday, according to exchange data.
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