Markets slipped on Tuesday after three straight sessions of gains, while the rupee fell to a record low, as oil prices rebounded after last week's rout and fanned inflation worries.
The Nifty dropped 0.65% to around 15,730 in early trade and Sensex slipped 0.64% to around 52,820.
The rupee hit a record low of 78.67 per dollar, compared with its previous close of 78.34.
Declining oil prices had helped shares rebound in the last three sessions. However, crude climbed on Tuesday as major producers flagged capacity limits and the G7 discussed a potential price cap on Russian oil.
"Oil will continue to boil in the $105-$115 range on supply concerns and the G7's vow to further sanction Russia, which will serve as a negative to large oil importers like India," said Prashanth Tapse, vice president (research) at Mehta Equities.
"The market is already facing a long list of challenges from expectations for slower economic growth around the world to the restraining effect of rising interest rates."
Shares of Titan Company fell as much as 3.8% to a one-week low, while Asian Paints, which uses crude derivatives, slid more than 4% and was the biggest percentage loser on the Nifty.
The Nifty IT index slipped 1.3% after climbing sharply in the previous session.
Food delivery firm Zomato plunged more than 7%, heading for its second straight session of losses after announcing a deal to buy local grocery-delivery startup Blinkit.
Oil explorer ONGC climbed 3% and was on track for a third session of gains in a row.
Automaker Mahindra and Mahindra helped plug some losses on the Nifty, rising as much as 3.6%.
Brigade Enterprises jumped 5.8% after the company signed a deal to develop apartments in the south Indian city of Chennai.
Asian shares were trading lower after a volatile session on Wall Street overnight.