The 30-share index was trading 516.79 points, or 1.38 per cent, lower at 36,816.00 in afternoon trade, while the broader Nifty sank 151.95 points, or 1.38 per cent, to 10,871.

In the previous session on Friday, the BSE barometer ended 263.86 points, or 0.71 per cent, higher at 37,332.79, while the Nifty rose 74.95 points, or 0.68 per cent, to close at 11,023.25.

Top losers in the Sensex pack in early trade on Tuesday included Tata Motors, Tata Steel, ICICI Bank, ONGC, HDFC, M&M, NTPC, Vedanta, ITC and SBI, which fell up to 4 per cent.

On the other hand, IT stocks rallied as the rupee depreciated 65 paise against its previous close to trade at 72.07 in early session.

TechM, HCL Tech, TCS and Infosys jumped up to 2 per cent.

According to traders, market sentiment took a hit on account of weak macroeconomic data releases and double-digit decline in auto sales in August as the sector continued to reel under one of the worst slowdowns in its history.

Official data released after market hours on Friday showed that India's GDP growth slipped to an over six-year low of 5 per cent in the June quarter of 2019-20, hit by a sharp deceleration in manufacturing output and subdued farm sector activity.

Additionally, the country's manufacturing sector activity declined to its 15-month low in August, owing to slower increases in sales, output and employment, the IHS Markit India Manufacturing Purchasing Managers' Index showed.

"GDP growth slowing down to 5 per cent is indeed worrying," said Deepthi Mathews, Economist at Geojit Financial Services, adding that the number shows that the economy has not still entered the recovery path.

Meanwhile, in an attempt to boost economic growth, the government on Friday unveiled a mega plan to merge 10 public sector banks into four as part of plans to create fewer and stronger global-sized lenders.

It gives a positive signal that the government is not just focusing on recapitalising the bank but also in improving the governance in the public sector banks (PSBs), Matthews said. "Measures taken to improve the efficiency of the PSBs is in the right direction as they are competing with the private sector."

On Friday, foreign portfolio investors bought shares worth a net of Rs 1,162.95 crore, while domestic institutional investors purchased shares worth Rs 1,502.27 crore, provisional data showed.

The rupee, meanwhile, depreciated 65 paise against its previous close to trade at 72.07 in early session.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, Korea and Japan were trading on a weak note in their respective late morning sessions after the US and China on Sunday put in place their latest tariff increases on each other's goods.

Markets in the US were shut on Monday on account of 'Labor Day'.

Global oil benchmark Brent crude was trading flat at 58.67 per barrel.