The BSE Sensex tumbled 866.78 points intra-day before closing 769.88 points, or 2.06%, lower to 36562.91. NSE Nifty 50, too, fell 250.55 points intraday before ending 225.35 points, or 2.04%, lower at 10797.90.

On Friday, the government data showed that GDP growth rate fell to an over six-year low to 5%. Growth of eight core industries dropped to 2.1% in July on account of contraction in coal, crude oil and natural gas production, along with the slump in auto sales numbers for August added to the selling pressure.

As per provisional data available on BSE, foreign portfolio investor net outflow on Tuesday was Rs 2,016.20 crore, while domestic institutional investor net inflow was Rs 1,251.35 crore.

According to Joseph Thomas, head of research, Emkay Wealth Management, the sharp fall in the GDP growth in April-June quarter to 5% and the weak core sector growth are the key factors that have caused a fall in the markets as it opened after a long weekend.

"The continuing negative global cues, the raging tariff war between the US and China and the likely sluggishness in the economic fortunes of nations have also been behind the rot in the markets here as well as elsewhere. Weak domestic consumption, especially rural, has resulted mainly from low employment levels and non-availability of finance, which are issues that call for immediate measures," Thomas said.

The 30-stock Sensex was dragged down by the metal, energy, and banking and financial stocks. Major losers during the day were ICICI Bank, Tata Steel, Vedanta, IndusInd Bank, HDFC and Tata Motors, losing up to 4.45%. Only Tech Mahindra and HCL Technologies reported gains up to 1.24%.

All the 11-sectoral indices were in loses. Nifty PSU Bank fell 4.87% on the first day of the trading session this week after the finance minister Nirmala Sitharaman announced the merger of 10 PSU banks into four. This is followed by Nifty Metal (-3.10%), Media (-2.59%), Private Bank (-2.34%) and Realty (-2.26%).

Shrikant Chouhan, head, technical research, Kotak Securities, said, "Nifty saw a steep sell-off today as government reforms announced on Friday post market hours failed to meet expectations. This triggered broad-based liquidation in the market and we saw constant selling pressure throughout the day."

Since July 5, the day the Union Budget 2019 was presented, domestic equity markets have mostly seen a steady selling pressure, especially from the overseas investors.

Romesh Tiwari, head of research, CapitalAim, said, "The market is reacting negatively to the economic data, which shows the deepening crisis in the domestic economy with no signs of revival. Auto sales data from major auto companies remains dismal for August. We saw no pause in FII selling even after the reversal of the additional surcharge that was imposed by Budget. The index is trading below 200-day moving average on the daily chart, below 11000 levels. For the coming session, if the Nifty index remains below 10800 levels, then we may see further fall towards 10604 and 10500 levels soon. On the upside, we may see supply coming above 10850 levels."