The S&P BSE Sensex index fell as much as 261.31 points to 37,135.93 in early trade, and the broader NSE Nifty benchmark declined to 11,014.80, down 70.6 points from the previous close. A selloff across sectors - led by banking, IT, metal and energy shares - dragged the markets lower.
At 9:17 am, the Sensex traded 162.75 points - or 0.44 per cent - lower at 37,234.49, while the Nifty was down 65.75 points - or 0.59 per cent - at 11,019.65.
Top laggards on the 50-scrip benchmark index at the time were Tech Mahindra, Axis Bank, Hindalco, IndusInd Bank and Bharat Petroleum, struggling with losses of between 1.28 per cent and 3.37 per cent.
Tech Mahindra on Tuesday reported a net profit of Rs. 959.3 crore in the April-June period. Its revenue in dollar terms stood at $1,247.1 million in the first quarter of the current financial year.
On the same day, Axis Bank posted a 95 per cent jump in net profit to Rs. 1,370.08 crore in the quarter ended June 30. Its net interest income - the difference between interest earned and interest expended - rose 13 per cent to Rs. 5,843.65 crore.
Axis Bank, HDFC Bank and Reliance Industries were the top drags on the Sensex.
On the other hand, Hero MotoCorp shares rose as much as 2.26 per cent, a day after the auto maker reported a 38.29 per cent rise in net profit to Rs. 1,257.34 crore in the quarter ended June 30.
Equities in other Asian markets weakened in early trade on renewed concerns about the US-China trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.04 per cent while Japan's Nikkei slid 0.84 per cent.
Major Wall Street stock averages ended slightly lower on Tuesday, with the S&P 500 losing 0.26 per cent, after US President Donald Trump warned China against waiting out his current presidential term before finalising a trade deal.
S&P 500 mini futures rose 0.17 per cent in Asia. The S&P 500 index has risen 2.4 per cent so far this month, bolstered by expectations for Fed easing.
Later in the day, the Federal Reserve is widely expected to cut interest rates for the first time since the financial crisis more than a decade ago. The expected easing by the US central bank has supported risk asset prices worldwide.
As a new round of US-China trade negotiations started in Shanghai, Mr Trump tweeted that if he wins re-election in November 2020, the outcome could be no agreement or a harsher one.
The Sensex and Nifty had ended 0.77 per cent and 0.93 per cent lower respectively on Tuesday. That marked the weakest closing level for the 50-share index since March 8, while the BSE benchmark settled at its lowest level recorded since May 16.