Investors were also spooked after US President Donald Trump Tuesday launched a fresh attack on India over its tariffs on American imports, traders said.

After swinging nearly 400 points during the day, the 30-share index settled 173.78 points or 0.45 per cent lower at 38,557.04. The index hit an intra-day low of 38,474.66 and a high of 38,854.85.

After dropping over 253 points in opening session, the 30-share index pared some losses to trade 152.50 points, or 0.39%, lower at 38,568.07 at 0930 hours. Similarly, the broader Nifty shed 49.25 points, or 0.43%, to 11,509.35.

The 30-share index was trading 405.67 points, or 1.03%, lower at 39,107.72 at 0930 hours. Similarly, the broader Nifty sank 128 points, or 1.08%, to 11,683.15.

Union Finance Minister Nirmala Sitharaman will be presenting the budget at 11 AM, and it will be interesting to see how the sensex reacts to the first budget of the Modi government,.

Indiabulls Housing, IndusInd Bank, ITC, Zee Entertainment and Grasim Industries were among major gainers on the Nifty, while losers were Eicher Motors, GAIL, Tech Mahindra, Vedanta and Dr. Reddy's Labs.

After swinging nearly 200 points in the first half hour of the session, the 30-share index was trading 29.49 points, or 0.07 per cent, higher at 39,845.97 at 0945 hours. Similarly, the broader Nifty was quoting 6.60 points, or 0.05 per cent, up at 11,916.90.

The 30-share index was trading 23.52 points, or 0.06 per cent, higher at 39,710.02 at 0930 hours. Similarly, the broader Nifty was quoting 8.70 points, or 0.07 per cent, up at 11,874.30.