Equity benchmark Sensex fell over 65 points in early trade on Tuesday in line with global market sell-offs as investors panicked after the US decision to impose tariffs on Argentina and Brazil.
The fresh trade war tensions along with unabated foreign fund outflows weighed heavily on the market sentiments, traders said.
The 30-share index was trading 65.51 points, or 0.16 per cent, lower at 40,736.66. Similarly, the Nifty slipped 23.75 points, or 0.20 per cent to 12,024.45.
In the Sensex pack, Tata Steel emerged as the biggest loser with a slide of 1.95 per cent, followed by Vedanta, IndusInd Bank, Bharti Airtel, ONGC and Axis Bank.
However, Bajaj Auto, Tata Motors, SBI, Bajaj Finance and Maruti gained in the morning trade.
On Monday, the Sensex closed marginally higher by 8.36 points or 0.02 per cent at 40,802.17. On the other hand, the broader NSE Nifty settled 7.85 points or 0.07 per cent down at 12,048.20.
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US President Donald Trump's on Monday said he would re-impose steel and aluminium tariffs on Brazil and Argentina. He alleged that both the countries are manipulating their currencies and hurting American farmers.
The US also threatened to impose tariffs of up to 100 per cent on French goods in retaliation for digital services tax.
These developments triggered fresh tension among investors, particularly on spillover concerns over the US-China trade war.
Asian markets fell on Tuesday as global trade tensions surfaced again after the US decision to impose tariffs on the South American countries.
Bourses in Hong Kong, Seoul, Shanghai and Tokyo were trading in negative zone.
Stocks on Wall Street ended on a negative note on Monday.
Foreign institutional investors sold shares worth Rs 1,731.33 crore in the capital market in the previous session, while domestic institutional investors bought equities worth 753.99 crore, data available with stock exchange showed.
On the currency front, the rupee appreciated 8 paise against the US dollar to trade at 71.58 in early session.
Brent futures, the global oil benchmark, surged 0.31 per cent to USD 61.11 per barrel.