The Sensex ended the day lower by 147 points, while the Nifty shed 36 points. The top losers in trade from the index stocks included steel and cement stocks including Ultratech Cement, Jindal Steel, Tata Steel, Tata Motors and Grasim.
Software stocks too came in for some heavy selling pressure, as analysts were worried that the US fiscal cliff would affect income for these companies. Wipro, Infosys and TCS all ended the sharply lower.
Banking shares were subdued in trade today with ICICI Bank, HDFC Bank and State Bank of India all dropping.
Shares of Wockhardt jumped almost 4% today after the company said its consolidated net profit rose 255% YoY to Rs 453.5 cr in Q2.
Gammon India dropped sharply by more than 5% after the company posted net loss at Rs 39.4 cr in Q2 Vs profit of Rs 4.1 cr YoY.
Shares of FMCG companies had a mixed day in trade today with ITC losing ground, while HUL gained.
Meanwhile, stocks in Asia closed mostly lower with the Singapore Strait Times, Hong Kong's Hang Sang and the Korean Kospi all losing ground.
Markets are expected to be volatile and will likely face resistance going higher on account of the fiscal cliff in the US and growth worries in the eurozone region.