Benchmark indices ended the day lower following a sharp drop in the European indices. The Sensex ended the day with losses of 246 points, while the Nifty closed lower by 72 points.
Banking stocks closed the day firm ahead of the RBI Monetary Policy on Sept 29.
Tata Motors was the top loserr in trade falling a huge 4 per cent on fears that Chinese growth rate could affect demand for Jaguar Land Rover range of models.
Dr Reddy's surged in trade after the company launched Esomeprazole magnesium delayed-release capsules. However, India's largest pharma player, Sun Pharma was among the top losers in trade.
Metal and mining stocks once again faced heavy selling pressure with stocks like Hindalco and Vedanta falling. Coal India hit a new 52-week low on the NSE.
Gammon India shares jumped 10 per cent after the company bagged an order worth Rs 1,710 crore from NHAI.
Meanwhile, markets in Europe were trading with a deep cut of more than one per cent. The German DAX, French CAC and the UK's FTSE were all lower in trade.