Benchmark indices tracked Asian peers lower on Tuesday, as investors awaited inflation data due this week for clues on the scale of monetary tightening by central banks, while the rupee opened at a fresh record low.
The NSE Nifty 50 index was down 0.6 per cent at 16,118.40, while the S&P BSE Sensex fell 0.53 per cent to 54,109.00.
Investors' focus will be on macro data, which includes India's retail inflation reading due later in the day, as well as the consumer price index from the US on Wednesday.
A spike in inflation would keep central banks on the path of aggressive rate hikes.
Meanwhile, the Reserve Bank of India said on Monday it was putting in place a mechanism for international trade settlements in rupees, which banks will need a prior approval to use.
The RBI's move comes as the Indian rupee touches all-time lows amid continued foreign portfolio outflows from domestic stock markets and a broadly stronger greenback.