After hitting a new peak of 28,294.01 in the opening trade on the back of continued overseas capital inflows and positive economic data, the Sensex fell back to dip below the psychological 28,000-mark by losing 175.51 points, or 0.62 percent, to 27,987.78 at 1415 hours.
Major losers that pulled down the Sensex and Nifty from record highs were metal, power, infrastructure, PSU, oil & gas, auto, realty and banking sector stocks.
The 30-share index had lost 14.59 points in the previous session.
Similarly, the National Stock Exchange index Nifty after scaling a new peak of 8,455.65 at the outset, succumbed to widespread profit-booking and slipped below the 8,400-mark to quote 61.95 points, or 0.74 percent, lower at 8,363.95.
Brokers said emergence of profit-booking by funds in stocks that had recently logged gains and a weak trend in global markets led to the fall in markets.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 101.98 crores on Tuesday, according to provisional data from the stock exchange.
Bucking the trend, shares of Dr Reddy, Hindustan Unilever, ICICI Bank, L&T, ITC Ltd, Bharti Airtel and Bajaj Auto on sustained buying by participants.
Among other Asian markets, Hong Kong's Hang Seng was down 0.66 percent, while Japan's Nikkei shed 0.32 percent.

European markets were down in their opening trade.

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