"Equity benchmarks erased opening gains, with the Nifty testing 10,000 level due to selling pressure in banking and financials and oil stocks".
The S&P BSE Sensex fell 0.80 percent to 32,014 while the broader NSE Nifty lost 0.78 percent to 9,978. Analysts attributed the plunge in Indian shares to the market regulator asking stock exchanges to take action against 331 suspected shell companies.
On global front, as per Reuters, Asian stocks advanced, taking their cue from Wall Street, while the dollar moderated but retained most gains made on stronger-than-expected July jobs growth and the promise of a USA tax plan that will repatriate corporate profits.
Bharti Infratel shares tumbled 3.5 percent. Hindalco, Vedanta Limited and Cipla were the best performers.
Motilal Oswal in its daily Market Outlook report said, "Nifty index managed to hold 9980-10000 zones and witnessed a sharp recovery from lower levels led by short covering activities in last one hour of the session".
In Asia, Japan's Nikkei fell 0.30%, while Hong Kong's Hang Seng rose 0.59% and Shanghai Composite Index edged up 0.07%.
In its Tuesday morning note, Geojit Financial Services said that the yield on 6.79% bonds maturing May 2027 closed flat at 6.46 percent on August 7 while the Indian rupee ended lower at 63.81 to the USA dollar, after rising to two-year high on Friday last week.