The Nifty shed 86.65 points to end the day at 5770 points, even as the rupee once again scaled passed the 60 mark against the dollar with ease.
Among the top losers in trade today from the Nifty pack were high beta names including those from the infra and the metals pack.
Stocks that saw maximum price erosion were Jaiprakash Associates, Bank of Baroda, Punjab National Bank, IDFC and Tata Power.
Defensive stocks showed resilience with Hindustan Unilever and ITC ending the day flat. Technology stocks did not fall sharply thanks to a drop in the value of the rupee.
PSU banking stocks were the worst hit in trade today with most of the stocks from the sector taking a hit of 4-7 per cent. Bank of India, Bank of Baroda, Canara Bank, IDBI Bank and Oriental Bank were the worst.
Realty stocks were the other space that was hit badly in trade. Among the stocks that declined were HDIL, Indiabulls and Unitech. Shares in Tata Global Beverages gained in trade after an upgrade from Morgan Stanley.
GVK Power on the other hand lost ground after reports that the Airports Economic Regulatory Authority (AERA) has turned down the company's proposal to hike user development fee (UDF) at Bangalore airport.
Meanwhile, markets in Europe were trading sharply lower following fresh worries over the Euro crisis, due top political turmoil in Portugal.