Indian markets ended the day sharply lower with the Sensex dropping by 274 points to close at 25,246 points, while the Nifty ended the day lower by 74 points, as investors worried over escalation in tensions in Iraq and ahead of the US Fed meet.

Key losers from the Nifty were BPCL, TCS, Sun Pharma and Tata Steel. Among the few gainers were Cipla, Gail, Hindalco and Lupin.

The NSE Midcap was also down and ended the day lower at 3250 points.

Major losers from the real estate pack were Prestige Estates, Indiabulls Real Estate Ltd, Unitech and Anand Raj.

Reliance Industries which disclosed an ambitious expansion programme of Rs1.8 lakh crores in the next three years, ended the day lower by more than 2 per cent. The Bank Nifty also dropped one per cent lower, with Canara Bank and Bank of India being the worst performers from the space.

Infra stocks also saw some heavy selling with GMR Infra dropping 4 per cent, with Gammon Infra and Hindustan Construction among the other losers.

Meanwhile, markets in Europe were trading with marginal gains led by the German DAX and the French CAC.

The Indian rupee fell 31 paise to 60.32 a dollar in afternoon trade. Brent crude held above $113 per barrel on Wednesday as heavy fighting in Iraq shut the country's biggest refinery and led to the withdrawal of staff by foreign oil firms, stoking worries about exports from the key oil producer.

GoodReturns.in