Indian equity markets closed lower on Tuesday, with the benchmark Sensex shedding 210 points and the Nifty 50 slipping 159 points.
The decline marks a continuation of recent selling pressure, as investors adopted a cautious stance ahead of the Reserve Bank of India's upcoming monetary policy announcement.
The sell-off was broad-based, reflecting heightened uncertainty surrounding the central bank's interest rate decision.
Market participants are closely monitoring whether the RBI will maintain its current stance or signal a shift in policy, given persistent inflationary pressures and global economic headwinds.
The lack of clarity has dampened risk appetite across both domestic and foreign institutional investors.
Compounding the sentiment drag is the introduction of a new closing-auction mechanism for futures and options (F&O) contracts.