A weak trend at other Asian bourses after a sharp fall on Wall Street, driven by technology stocks, also weighed on market sentiment here.
The 30-share index was trading lower by 164.52 points, or 0.49 per cent, to 33,009.87. The gauge had gained 577.85 points in the previous two sessions.
All the sectoral indices, led by metals, PSU, power and banking stocks, were trading in the red, falling up to 1.34 per cent.
The NSE Nifty fell by 59.40 points, or 0.58 per cent, to 10,124.75 in early trade.
Major losers that dragged down key indices were Tata Steel, Adani Ports, SBI, NTPC, Yes Bank, ICICI Bank, Asian Paint, Coal India, ONGC, Power Grid, RIL, HDFC Bank and Infosys, declining up to 2.08 per cent.
Investors are cutting bets on the last trading session of March F&O expiry and the end of financial year 2017-18, brokers said.
Markets will remain closed on Thursday and Friday on account of Mahavir Jayanti and Good Friday, respectively.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net of Rs 1,063.12 crore, while DIIs made purchases to the tune of Rs 2,172.91 crore on Tuesday, provisional data showed.
Elsewhere in Asia, Hong Kong's Hang Seng shed 1.29 per cent, while Japan's Nikkei was down 1.77 per cent in early trade today. The Shanghai Composite Index too fell 0.76 per cent.
The US Dow Jones Industrial Average ended 1.43 per cent lower on.