Equity benchmark Sensex dropped over 300 points in early trade on Tuesday, dragged by losses in financial stocks amid selloff in global markets.

After touching a low of 36,339.07, the 30-share BSE Sensex was trading 277.05 points, or 0.76 per cent, lower at 36,416.64.

In similar movement, the NSE Nifty fell 74.85 points, or 0.69 per cent, to 10,727.85.

Shares of the HDFC duo led the fall in the indices, shedding up to 3 per cent, after HDFC Bank said it has launched a probe into its auto lending practices following allegations against the conduct of a long-time executive who retired on March 31 this year.

IndusInd Bank, Bajaj Finserv, Axis Bank, Bajaj Finance, Maruti and SBI were among the other laggards.

On the other hand, HCL Tech, Infosys, Nestle India, UltraTech Cement and ITC were the gainers.

In the previous session, the BSE barometer ended 99.36 points, or 0.27 per cent, higher at 36,693.69, and the Nifty closed 34.65 points, or 1.15 per cent, up at 10,802.70.

Foreign institutional investors were net buyers in the capital market on Monday, purchasing equities worth Rs 221.76 crore, provisional exchange data showed.

According to traders, besides stock-specific actions, negative cues from global markets amid escalating US-China tension and rising COVID-19 cases dampened investor sentiment here.

Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with significant losses.

Stock exchanges on Wall Street also ended on a negative note.

Asserting that the "Chinese predatory world view" had no place in the 21st century, the US, in a major policy decision on Monday, categorically rejected the territorial claims made by Beijing in South China Sea, stating that it has no legal grounds to unilaterally impose its will on the region.

On the coronavirus front, the number of cases around the world linked to the disease has crossed 1.30 crore.

In India, the number of infections spiked to 9.06 lakh, according to the health ministry.

Meanwhile, international oil benchmark Brent crude futures fell 2.06 per cent to USD 41.84 per barrel.