Benchmark stock indices faced heavy volatility in early trade on Tuesday and were trading lower as investors preferred to stay on the sidelines ahead of the Reserve Bank of India's interest rate decision later this week.

Foreign fund outflows and weak trends in the US equities also dented sentiments in markets during early deals.

The 30-share BSE Sensex fell 72.61 points to 62,714.86 in initial trade. The NSE Nifty dipped 12.15 points to 18,581.70.

Both the benchmark indices were oscillating between highs and lows in a highly volatile trade.

From the Sensex pack, UltraTech Cement, Titan, Kotak Mahindra Bank, Asian Paints, Maruti and Axis Bank were among the major gainers.

Tech Mahindra, Infosys, HCL Technologies, Wipro, Tata Consultancy Services, ICICI Bank, Tata Steel and Hindustan Unilever were among the laggards.

In Asian markets, Tokyo, Shanghai and Hong Kong were trading in the green.

The US markets ended lower on Monday.

Global oil benchmark Brent crude dipped 0.20 per cent to USD 76.54 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 700.98 crore on Monday, according to exchange data.

"Markets could retreat in early Tuesday trades owing to overnight weakness in key US indices, while denting sentiments a bit would be FII selling that continued for the second consecutive day. In a bullish Monday’s session at Dalal Street, FIIs sold local shares worth Rs 701 crore," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said in his pre-opening market comment.

The Sensex climbed 240.36 points or 0.38 per cent to settle at 62,787.47 on Monday. The Nifty advanced 59.75 points or 0.32 per cent to end at 18,593.85.

"Since the MPC June meeting starts today, there will be some focus on rate sensitives. The RBI commentary will be closely watched," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

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