Equity benchmark indices declined in early trade on Tuesday amid weak trends from Asian markets and fresh foreign fund outflows.
Investors also opted to book profits after the recent sharp rally in the markets.
The 30-share BSE Sensex fell 202.76 points to 72,069.18. The Nifty declined 42.9 points to 21,699.
Among the Sensex firms, UltraTech Cement, Mahindra & Mahindra, Infosys, Asian Paints, HCL Technologies and Larsen & Toubro were the major laggards.
Sun Pharma, Bharti Airtel, Reliance Industries, Bajaj Finserv and Power Grid were among the winners.
In Asian markets, Seoul, Shanghai and Hong Kong were trading lower.
Asian, European and the US markets were closed on Monday for the New Year.
Global oil benchmark Brent crude jumped 1.65 per cent to USD 78.31 a barrel.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹855.80 crore on Monday, according to exchange data.
The BSE gauge eked out a modest gain of 31.68 points or 0.04 per cent to settle at 72,271.94 after a muted beginning on Monday. The Nifty went up by 10.50 points or 0.05 per cent to 21,741.90.
In 2023, the BSE benchmark jumped 11,399.52 points or 18.73 per cent, and the Nifty climbed 3,626.1 points or 20 per cent.