Equity benchmark Sensex plunged over 700 points in early trade on Tuesday, tracking losses in index majors Infosys, ICICI Bank and Reliance Industries amid persistent foreign fund outflows.

After touching a low of 57,718.34 in the opening session, the 30-share index pared some losses to trade 264.20 points or 0.45 per cent lower at 58,201.69.

Similarly, the Nifty was trading 89.05 points or 0.51 per cent down at 17,327.50. It touched a low of 17,216.10 in initial deals.

Infosys, the top loser in the Sensex pack, shed around 2 per cent, followed by ICICI Bank, HUL, Bajaj Auto, Reliance Industries and TCS.

On the other hand, Tata Steel, PowerGrid, Bajaj Finance and ITC were among the gainers.

In the previous session, Sensex ended 1,170.12 points or 1.96 per cent lower at 58,465.89, and Nifty fell 348.25 points or 1.96 per cent to 17,416.55.

Foreign institutional investors (FIIs) were net sellers in the capital market, as they offloaded shares worth Rs 3,438.76 crore on Monday, as per exchange data.

"The market heavyweight RIL re-evaluating the Aramco deal, Paytm's disastrous listing, resurgence of COVID in parts of Europe, RBI's warning of stretched valuations, foreign brokerages downgrading India and the roll back of farm laws created the perfect storm that spooked the market," said VK Vijayakumar, Chief investment Strategist at Geojit Financial Services.

This is a much needed correction which will make the market healthy, he said, adding that Paytm's fiasco is a reality check on the froth in the primary market and will restrain the irrationally exuberant newbie investors.

"While Nifty has corrected 6.4 per cent from the peak, Nifty Bank has corrected 12.4 per cent from the peak indicating weakness in the banking sector even though valuations are not stretched in banking.

"Sustained selling by FIIs will continue to be a negative sentiment in the market. The retail investor response to the correction should be watched," he stated.

Elsewhere in Asia, bourses in Hong Kong and Seoul were trading with losses in mid-session deals, while Shanghai and Tokyo were positive.

Stock exchanges in the US largely ended in the red in the overnight session.

Meanwhile, international oil benchmark Brent crude fell 0.45 per cent to USD 79.34 per barrel.