The trade war tensions between the US and China along with unabated foreign fund outflows weighed heavily on the market sentiments, traders said. Tracking tepid global market trend, the 30-share index was trading 333.32 points, or 0.90 per cent, lower at 36,685.00.

Similarly, the 50-share Nifty slipped 105.15 points, or 0.96 per cent to 10,874.85. In the Sensex pack, HeroMotoCorp emerged as the biggest loser with a slide of 2.78 per cent, followed by Vedanta, ONGC, Bajaj Finance, HCL Tech, Tata Steel.

However, Bharti Airtel, Asian Paint, Tata Motors and Infosys gained in the morning trade. In the previous session, Sensex plunged 462.80 points or 1.23 per cent to end at 37,018.32. The broader NSE Nifty dropped 138 points or 1.24 per cent to close below the key 11,000-mark at 10,980.00.

US President Donald Trump's decision to impose new tariffs on Chinese goods triggered fresh tension among investors over the trade battle between the two largest economies.

Trump on Thursday announced that the US will impose a 10 per cent levy on USD 300 billion in Chinese goods.

The new tariffs is expected to go into effect from September 1. Foreign investors sold shares worth Rs 1,056.55 crore on a net basis on Thursday, as per provisional data with stock exchanges.

Elsewhere in Asia, Shanghai Composite Index, Hang Seng, Nikkei and Kospi were trading lower in their respective early sessions.

Wall Street stocks finished lower on Thursday after announcement of a new round of tariffs on Chinese goods. Meanwhile, the rupee declined by 21 paise to 69.27 against the US dollar in morning trade. The global oil benchmark Brent crude futures surged by 2.61 per cent to 62.08 per barrel