The Sensex dropped a further 100 points in early trade, extending three days of losses, while the Nifty shed 37 points in early trade.
Stocks that pushed the Nifty lower were Hindalco, BPCL, Gail, Dr Reddy's Labs, Axis Bank, Maruti Suzuki and Oil and Natural Gas Corporation.
Stocks that gained were the beaten down names of Tuesday including HDFC and DLF. Other stocks that saw marginal gains were Lupin Labs, Hindustan Unilever, Reliance Industries, IDFC, Infosys Technologies, NTPC, Sesa Goa and Tata Motors.
Asian Paints fell marginally despite the company acquiring a 51 percent stake in Sleek Group for an undisclosed sum.
Lloyds Steel on the other hand gained 5 per cent after the company allotted 15 crore equity shares at Rs 15.13/share on conversion to IDBI Bank.
IFCI gained after reports that the Finance Ministry plans to sell majority stake in the company.
High beta names from the metals and real estate pack continue to slide following poor all round sentiments.
Metal stocks that declined in trade were Jindal Steel, JSW Steel, Guj NRE Coke and Orissa Minerals.
Realty stocks that dropped in trade today were HDIL, Indiabulls and Unitech.
Banking stocks which were trading firm had little to cheer from the RBI's credit policy. Selling pressure in these stocks continued for a second successive day with prominent declines from the space including names like Axis Bank, Canara Bank, HDFC Bank, Punjab National Bank, State Bank of India, Union Bank of India and Indian Overseas bank.
Meanwhile, Asian markets were trading mixed with the Hong Kong's Hang Sang and the Chinese Shanghai Composite trading higher, while the Korean Kospi and the Taiwan Weighted declined.