Domestic equity benchmarks Sensex and Nifty erased early gains to settle with losses for the second day on the trot on Tuesday, as surging COVID-19 cases and growing localised restrictions continued to dent investor sentiment.

The BSE Sensex slipped 243.62 points or 0.51 per cent to close the session at 47,705.80. Intra-day, the BSE gauge rose as much as 529 points to touch the day's peak of 48,478.34.

Likewise, the NSE Nifty climbed over 167 points to reclaim the key 14,500-level during the day, but surrendered all its gains to end at 14,296.40, showing a drop of 63.05 points or 0.44 per cent.

On the Sensex chart, UltraTech Cement, HCL Tech, HDFC, Tech Mahindra, HDFC Bank and HUL emerged as the major laggards - falling as much as 4.7 per cent.

On the other hand, Bajaj Finserv, Dr Reddy's, Bajaj Finance, Bajaj Auto and Maruti were among the top gainers.

Market analysts said a continued spike in fresh COVID-19 cases in the country and announcements of restrictions by several states have clearly dented investor sentiments and posed a threat to earnings recovery.

Elsewhere in Asia on Tuesday, equity bourses saw mixed trading as investors awaited the release of China's latest benchmark lending rate. Japan led losses among the region's major markets, followed by Hong Kong.

US stocks ended lower on Monday, slipping from last week's record levels.

Meanwhile, global crude oil benchmark Brent futures rose 0.77 per cent to USD 67.68 per barrel, despite concerns about the impact on oil demand going forward due to rising coronavirus cases in India.

The rupee ended almost flat at 74.88 (provisional) against the US dollar on Tuesday.