The Sensex was mainly pulled down by Nestle, HUL, Bajaj Finance, Kotak Bank, HDFC and Reliance – shedding as much as 3 percent.

On Monday, in the special one-hour Muhurat Trading session, indices began Samvat 2079 on a high. The Sensex surged 525 points or 0.88 percent to close at 59,832 and the Nifty advanced 154 points or 0.88 percent to end the session at 17,731.

“The initial months of Samvat 2079 are likely to be highly volatile with alternative bouts of selling and buying in the mother market US, which will have repercussions on other markets including India’s. In this highly un-certain environment clarity is emerging on some important trends: one, the US economy is slowing down and the most likely scenario is a short and mild recession, which the market has largely discounted,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

India’s growth too will be impacted by a global slowdown but India will be the least impacted large economy, he added. “This environment coupled with the resources of DIIs and retail investors can hold the market in good stead and can take it to new record highs, but high valuations are a concern. Investors can approach Samvat 2079 with cautious optimism and remain invested in high quality stocks and buy on declines in performing sectors like banking, capital goods, telecom and autos.”

Elsewhere in Asia, equities wallowed around lows hit early in the pandemic on Tuesday, while China’s yuan slumped to a nearly 15-year trough as investors were rattled by President Xi Jinping’s growing power.

US and European futures were flat as investors awaited corporate earnings from heavyweights including Alphabet and Microsoft.

MSCI’s broadest index of Asia-Pacific shares fell to the lowest since April 2020 before an attempted rebound in beaten-down Hong Kong tech shares dragged it back to flat.