The Sensex fell 204 points, while the Nifty dropped 58 points in early trade. Among the Nifty stocks that saw maximum price damage were Jaiprakash Associates, IDFC, Bharti Airtel and DLF.
Top Nifty gainers in trade were the pharma and IT stocks which rallied as the rupee threatened to breach the 60 mark again. Infosys, HCL Tech, Ranbaxy and Lupin Labs were among the gainers.
The PSU banking space was once again badly hit in trade with losers including Andhra Bank, IDBI Bank, Canara Bank and Oriental Bank.
Heavyweights, Reliance and ONGC which gained over the last few days following a gas price hike, fell sharply in trade today.
Ideal Cellular was among the few gainers in trade following reports of a block deal. Bharti Airtel, however, saw large unwinding and dropped more then 3 per cent.
Meanwhile, markets in Asia were trading lower with top losers including the Chinese Shanghai Composite and the Hong Kong's Hang Sang.