Investors will also closely watch election results.
The stock markets are likely to open sharply lower on Tuesday, a day marked with the much-awaited results of assembly elections in five states.
The SGX Nifty was down 169.5 points, or 1.6 per cent, at 10,348.50 on Tuesday morning.
The Nifty and Sensex had plunged around 2 per cent on Monday to register their worst closing levels in four weeks, dragged lower by an across-the-board selloff.
Reserve Bank of India Governor Urjit Patel stepped down on Monday.
Early leads show Congress leading in Rajasthan and the BJP in Madhya Pradesh.
In Chhattisgarh, both parties are neck to neck.An aggregate of exit polls predicts a tight race in Madhya Pradesh and Chhattisgarh.Analysts say the exit of RBI governor is likely to cause nervousness among investors in the short term."I think typically when central bank governors or leaders anywhere in the world quit, that potentially can have significant effect on the currency and bond markets.
I think it's something that we'll be watchful for," said R Sivakumar, head of fixed income, Axis Mutual Fund.
"I think on Tuesday and over the next few days we can expect heightened volatility in the markets."Investors will also closely watch election results, which will set the tone for general elections due next year."Markets were not prepared for this.
Tuesday is also the political uncertainty day.
So, if that saves then you'll see some saving grace.
Otherwise, I don't think markets may take this very kindly, especially dollar-rupee," saidLakshmi Iyer, chief investment officer, fixed income, Kotak Mahindra AMC.The rupee - which declined 50 paise to slip below the 71 mark on Monday, is expected to fall further.The rupee forwards - which track the performance of the currency against the dollar - registered their biggest daily slump in more than five years on Monday.Monday's closing level of 71.32 takes losses in the rupee to 11.7 per cent against the dollar so far this year.Domestic equity markets will also take mixed cues from Asian peers.
While theNikkei 225 index rose 0.06 per cent or 13.49 points to 21,232.99 in early trade, the broader Topix index was down 0.13 per cent or 2.12 points at 1,587.69.Hong Kong stocks slipped in the first few minutes of trade as investors brushed off a positive lead from Wall Street, spooked by concerns over the global economy.
(: Government Not Informed In Advance Of Urjit Patel's Decision - Report)Wall Street fell sharply overnight as the postponement of Britain's Brexit vote added to fears about a slowdown in the US economy and an escalation in trade tensions with China, however a resurgence in technology shares lifted the markets.The Dow Jones Industrial Average rose 0.1 per cent, the SP 500 0.2 per cent, and the Nasdaq Composite 0.7 per cent.(With agency inputs)For the latest News Live Updates on Election Results from each assembly constituency in Madhya Pradesh, Rajasthan, Mizoram, Chhattisgarh, Telangana, like us on Facebook or follow us on Twitter for updates.