Equity benchmark indices Sensex and Nifty slumped over 1 per cent on Tuesday, weighed down by an across-the-board selloff amid cautious investors approach ahead of the US Fed interest rate decision.

Falling for the second day in a row, the 30-share BSE benchmark Sensex tanked 1,064.12 points or 1.30 per cent to settle at 80,684.45. During the day, it slumped 1,136.37 points or 1.39 per cent to 80,612.20.

The NSE Nifty tumbled 332.25 points or 1.35 per cent to 24,336.

From the 30-share blue-chip pack, all firms ended in the red. Bharti Airtel, IndusInd Bank, JSW Steel, Tata Consultancy Services, Asian Paints, Larsen & Toubro, Reliance Industries and HDFC Bank were the biggest laggards.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled lower.

European markets were mostly trading in negative territory. Wall Street ended mostly higher on Monday.

"Widespread pessimism prevails across all sectors ahead of key policy decisions from the US Fed, BoJ (Bank of Japan), and BoE (Bank of England). While the market has already factored in a 25 bps cut from the US Fed, it remains vigilant for any hawkish signals. The BoJ and BoE are largely expected to maintain their current rates for the year.

"Concurrently, the rupee has depreciated to an all-time low, and a record-high trade deficit is exacerbating the pressure," Vinod Nair, Head of Research, Geojit Financial Services, said.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 278.70 crore on Monday, according to exchange data.

Global oil benchmark Brent crude declined 0.50 per cent to USD 73.58 a barrel.

The 30-share gauge declined 384.55 points or 0.47 per cent to settle at 81,748.57 on Monday. The Nifty lost 100.05 points or 0.40 per cent to 24,668.25.