The Sensex was trading lower by 156 points, while the Nifty dropped 45 points in trade.
Indian IT Stocks fell in line with technology stocks in the US. Infosys was down 0.50 per cent in trade, while Tata Consultancy fell 0.20 per cent and HCL Tech also dropped.
Banking stocks also fell in line with the broad markets with private sector lenders ICICI Bank, Kotak Bank losing ground.
Shares in IndusInd Bank fell after foreign funds would now need permission to invest in the bank as the FII limit had been reached.
Crompton Greaves was trading lower despite the company bagging a contract from Power Grid Corporation of India Ltd to supply six sub-station automation systems in Jharkhand.
PSU Banking stocks which have been rallying sharply dropped in trade with notable losers being Union Bank of India, Canara Bank, IOB and Allahabad Bank.
Mid cap stocks also saw some losses with selling pressure seen in Oriental Bank of Commerce, Power Finance Corporation and Steel Authority of India.
Meanwhile, Asian markets were trading lower led by losses in the Japanese Nikkei and the Shanghai Composite.