The BSE benchmark Sensex resumed lower at 16,872.30 and dropped further to 16,706.11 before quoting at 16,717.83 at 1030 hours, a loss of 164.84 points, or 0.98 per cent, from its last close.
The NSE's 50-share Nifty index also dropped by 32.75 points, or 0.65 per cent, to 5,035.75 at 1030 hours.
PSU OMCs were among the worst-hit after state-run oil refiners cut petrol prices by Rs 1.85 per litre. Index heavyweight Reliance Ind (RIL) edged lower in early trade, while L&T and BHEL fell to 52-week lows.
BPCL, HPCL and Indian Oil Corporation (IOCL) fell by between 1.98 per cent and 3.1 per cent after state-run oil refiners cut petrol prices by Rs 1.85 per litre, the first reduction in three years.
Other losers were BHEL (down 5.46 per cent), Larsen (3.97 per cent), Jaiprakash Associates (3.42 per cent), Hero MotoCorp (2.85 per cent), Wipro (2.74 per cent), Reliance Industries (2.32 per cent) and Coal India (2.28 per cent).
Meanwhile, Asian shares struggled in early trade as signs that rising borrowing costs were affecting AAA-rated France stirred fears that even core euro zone members may not escape contagion of the region's two-year old debt crisis.
The key benchmark indices in China, Hong Kong, Indonesia, South Korea, Singapore, Japan, and Taiwan were down by between 0.58 per cent and 2.07 per cent.