Equity benchmarks Sensex and Nifty halted their five-day rally on Tuesday and settled deep in the red, mirroring weak global markets, with decline in index heavyweights Reliance Industries, Infosys and HDFC Bank.

Despite opening with gains of over 200 points, the 30-share Sensex turned highly volatile and tumbled 709.17 points or 1.26 per cent to close at 55,776.85. During the day, the benchmark index plunged 1,067.07 points or 1.88 per cent to 55,418.95.

The broader NSE Nifty also declined 208.30 points or 1.23 per cent to close at 16,663.

From the 30-share Sensex pack, Tata Steel, Tech Mahindra, Kotak Mahindra Bank, Infosys, Reliance Industries Limited, Axis Bank and HCL Tech were the major drags.

On the other hand, Mahindra & Mahindra, Maruti Suzuki, Nestle India, Asian Paints and Titan were among the gainers.

Bourses in Hong Kong and Shanghai settled sharply lower amid concerns over fresh virus lockdowns. Tokyo was marginally higher.

Exchanges in Europe were largely trading lower in the afternoon trade.

Stock exchanges in the US settled on a mixed note in the overnight trade.

The scheduled Federal Reserve policy meeting is also keeping markets on edge.

"The world equity market lost its momentum as new financial and trade sanctions were imposed on Russia along with the suspension of gas imports. It is a setback for the market sentiment, which was improving in anticipation of a truce in war. The Indian market was outperforming due to ease in commodity prices.

"World markets are also lower ahead of the US Fed meeting," according to Vinod Nair, Head of Research at Geojit Financial Services.

Meanwhile, international oil benchmark Brent crude tumbled 6.11 per cent to USD 100.4 a barrel.

Foreign institutional investors continued their selling spree in Indian markets as they offloaded shares worth Rs 176.52 crore on a net basis on Monday, according to exchange data.

Retail inflation hit an eight-month high of 6.07 per cent in February, remaining above the RBI's comfort level for the second month in a row, while wholesale price-based inflation soared to 13.11 per cent on account of hardening of crude oil and non-food item prices, government data showed on Monday.