After touching a low of 31,097.50, the 30-share index was trading 400.20 points or 1.27 per cent lower at 31,161.02.
Similarly, NSE Nifty declined 103.95 points, or 1.13 per cent, to 9,135.25.
Asian Paints was the top loser in the Sensex pack, falling over 3 per cent, followed by HDFC duo, Maruti, ONGC, HUL, ICICI Bank and Kotak Bank. On the other hand, UltraTech Cement, Tech Mahindra, Sun Pharma, ITC and NTPC were trading higher.
In the previous session, the BSE barometer settled 81.48 points or 0.26 per cent lower at 31,561.22, and the broader Nifty fell 12.30 points, or 0.13 per cent, to 9,239.20.
Foreign portfolio investors purchased equities worth Rs 534.87 crore in the capital market on Monday, provisional exchange data showed.
According to traders, weak cues from global markets on fears of a second wave of coronavirus infections spooked investors across Asia.
Following the reports, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with significant losses.
On Wall Street, stock exchanges settled on a positive note.
International oil benchmark Brent crude futures were trading 0.24 per cent higher at USD 29.70 per barrel.