The NSE Nifty50, which closed above the psychologically important 10,000-point mark for the first time on July 26, slipped to below that level by the day's close.
The Tata Steel stock was trading 3.4 percent higher at Rs 620 on the Bombay Stock Exchange (BSE) at around 10.40 am while Hindalco and Vedanta were up 3.82 percent (at Rs 236) and 3.56 percent (at Rs 298), respectively, on the National Stock Exchange (NSE).
Financial and consumer stocks were top contributors to the fall.
Market breadth was in the favour of losers, with about 2 stocks declining to every 1 stock that advanced.
On Monday, the benchmark indices traded on a flat-to-negative note.
Investors turned jittery after the market regulator last night directed bourses to initiate action against the suspected shell companies scrips of which will not be available for trading this month.
On the currency front, the rupee strengthened by 17 paise to close at 63.63 to a United States dollar from its previous close at 63.80.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 199.21 crore yesterday, as per provisional data released by the stock exchanges.
Indian equities continued to decline for the second day on Tuesday.
"Concerns about valuations also weighed on markets".