The Sensex ended the day lower by 229 points, while the Nifty dropped by 71 points to end at 5676 points. Shares of DLF was amongst the worst performers today with the stock dropping more than 6% following reports that the company had extended favours to Robert Vadhra, the Son-in-law of Congress President Sonia Gandhi.
Heavyweight Reliance Industries dropped sharply by more than 4% after reports that Morgan Stanley cut the company's ratings to 'underweight' from 'equal-weight', citing expectations of weaker refining margins and valuation concerns among other factors.
Software stocks continue to lose ground, with Wipro, TCS and Infosys all dropping on fears that the recent gains in the rupee will squeeze margins of these companies.
Top gainers from amongst the Nifty stocks in trade today were Sun Pharma, Ultra Tech Cements, Asian Paints and Bharti Airtel.
Shares of Kingfisher was stuck at the lower end of the circuit filter after reports that DGCA had issued a showcause notice to the company.
Meanwhile, shares in Europe saw a sell-off following fresh worries of the eurozone crisis. The German DAX and the French CAC were both down more than 1% in trade.