MUMBAI: Benchmark indices Sensex and Nifty declined in early trade on Tuesday amid profit-taking after recording a sharp rally in the previous session as investors turned cautious in view of the ongoing conflict between Israel and Iran.

Investors also preferred staying on the sidelines ahead of the US Fed interest rate decision later this week, experts noted.

The 30-share BSE Sensex declined 127.02 points to 81,669.13 in early trade. The 50 share NSE Nifty dipped 55 points to 24,891.50.

From the 30-Sensex firms, IndusInd Bank, Tata Motors, Titan, Bajaj Finance, Sun Pharma and UltraTech Cement were among the laggards.

Kotak Mahindra Bank, Axis Bank, NTPC and Adani Ports were among the gainers.

In Asian markets, South Korea's Kospi and Japan's Nikkei 225 index were trading in the positive territory while Shanghai's SSE Composite index and Hong Kong's Hang Seng quoted lower.

US markets ended higher on Monday.

"Despite the escalation of the Iran-Israel conflict globally stock markets are steady and resilient. The main contributor to the market resilience is the retail investors using every dip in the market as a buying opportunity. Valuations do not appear to deter retail investors. During the last 4 trading days after the conflict started FIIs sold stocks for Rs 8,080 crore.

"This FII selling has been completely eclipsed by DII buying of Rs 19,800 crore. Sustained retail funds flows, mainly through SIPs, are empowering the DIIs to buy consistently," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Global oil benchmark Brent crude climbed 0.53 per cent to USD 73.62 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,539.42 crore on Monday, according to exchange data, while Domestic Institutional Investors (DIIs) bought equities worth Rs 5,780.96 crore.

On Monday, the 30-share BSE Sensex jumped 677.55 points or 0.84 per cent to settle at 81,796.15. The Nifty climbed 227.90 points or 0.92 per cent to 24,946.50.