The benchmark indices settled lower on Tuesday amid a weakening rupee, which fell to its fresh record low for the third straight session earlier in the day.
The S&P BSE Sensex ended at 38,158, down 155 points while the broader Nifty50 index settled at 11,520, down 62 points.
The Indian currency slipped to a new record low of 71.50 per dollar in intra-day trade. It has declined 3.3 per cent in August and over 10 per cent so far in year-to-date, to emerge as the worst-performing currency in Asia.
In individual stocks, banking shares such as HDFC Bank, State Bank of India (SBI), IndusInd Bank and ICICI Bank fell in the range of 1 per cent to 3.3 per cent.
Among sectoral indices, the Nifty IT index rose around 2 per cent led by a rise in Infosys, HCL Technologies, and Tata Consultancy Services (TCS).
TCS at new high; m-cap hits Rs 8 trillion
Shares of Tata Consultancy Services (TCS) hit a new high of Rs 2,099 per share in intra-day trade, rising 2% on the National Stock Exchange (NSE), trading close to their share buyback price of Rs 2,100 per share. The market-capitalisation hit the Rs 8-trillion mark on Tuesday, the third time it has achieved this feat ever in intra-day.
READ MORE FPIs ring alarm bells on Sebi ownership notice; Market regulator calls it "preposterous" The sentiment was also affected after the foreign portfolio investors (FPIs) upped their ante against a circular issued by the market regulator, Securities and Exchange Board of India (Sebi), on beneficial ownership of offshore funds.
On April 10, SEBI modified the KYC norms applicable to Foreign Portfolio Investors. NRIs, OIC s and PIOs are now prevented from being "Beneficial Owners", or "in control", via the FPI route.
With a lobby of FPIs trying hard to get the proposed changes to KYC norms withdrawn, market regulator Sebi on Tuesday said it is "preposterous and highly irresponsible" to claim that $75 billion will move out of India because of the regulatory move.
Global Markets
Asian shares fell and the dollar turned higher on Tuesday as the trade dispute between the United States and China threatened to escalate this week, and as emergency austerity measures in Argentina underscored the turbulence gripping emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent. Chinese blue-chips also fell 0.3 per cent, reversing earlier gains. Japan's Nikkei slid less than 0.1 per cent, while Australian shares were 0.4 per cent lower ahead of a central bank policy meeting.
 "MARKET WRAP: Indices settle lower on weak rupee; TCS m-cap at Rs 8 trillion")
