The Sensex traded lower by over 259 points, or 0.71 percent, at 36,319 at 12.21 pm. The Nifty slipped below 10,900, falling by nearly 83 points, or 0.75 percent, to trade at 10,879. Broader markets also underperformed with the Nifty MidCap down by 0.84 percent and the BSE MidCap lower by 0.85 percent. Apart from Sun Pharma and Kotak Bank, GAIL, HPCL, Wipro and Bajaj Finance rose between half a percent and 2 percent. Vedanta, JSW Steel, M&M, Tata Steel, Hindalco, HCL Technologies and Tata Motors fell between 2 and 3.3 percent.

Shares of Hindustan Zinc plunged over 4 percent to an 18-month low of Rs 256.35 after the company on Monday reported a weak performance for the quarter ended December. The Vedanta-owned company posted a fall in net profit, revenue from operations, and margins for Q3. Brokerage firm Credit Suisse retained its "neutral" rating on shares of the company as it believes the growth guidance given by the metal and mining company is "intact" despite delays in commissioning a few projects. Credit Suisse said the problem of excess cash and challenge to find avenues for reinvestment caps the upside in the stock. The brokerage firm has set a target price of Rs 274.45 for the stock. 

Shares of Zensar Technologies fell 6 percent to hit their one-month low of Rs 219.80 as the company reported weak results for the December quarter. The company's profitability in the quarter deteriorated as operating margin contracted to 10.66 percent from 12.68 percent a year ago. The weakness in operating performance reflected in the company's bottomline as it posted a near 41 percent sequential fall in consolidated net profit to Rs 553 million, below analysts' estimate of Rs 777 million. The company's revenue from operations in the quarter rose 6.9 percent on quarter to Rs 10.36 billion. At 10.32 am, shares of the company traded 4.4 percent lower at Rs 224.25.  

Shares of Ashok Leyland touched 52-week low of Rs 87.20, down more than 3.5 percent after brokerage house CLSA reiterated sell on the stock and also cut target to Rs 75 from Rs 85 per share. CLSA sees high likelihood of a downturn after 4 years of up-cycle for truck market and expect competition to intensify in a downturn. Shares quoted at Rs 87.40, down by 3.53 percent on the NSE at 10.20 am. 

Meanwhile, the Nifty traded down by 42.45 points, or 0.39 percent, at 10,919.40. The Sensex slipped by 135.72 points, or 0.37 percent, at 36,443. 

Share price of Prabhat Dairy surged 20 percent in the early trade on Tuesday after company board approved sale of its stake in step down subsidiary. At 10 am, shares traded at Rs 108.30, still up by 16.4 percent on the BSE.