After a breathtaking rally late last week and early part of this week, the indices dropped in trade today on selling pressure.
The Sensex ended the day lower by 503, while the Nifty shed 148 points in trade at the close.
HDFC Twins which have a significant weightage on the index, along with SBI were dragging the indices lower. Apart from this, auto stocks were the biggest losers including the likes of Tata Motors, Maruti and Eicher Motors.
Shares in SBI fell, after a brokerage revised its target on the stock. In fact, the entire PSU Banking space was trading with losses and the PSU Bank index was down more than 3 per cent.
Strides Pharma shares fell 3 per cent after reports that the US FDA was examining the levels of NDMA in ranitidine and is evaluating any possible risks to patients.
Other sectors that were weak in trade were auto and financial services. Markets are expected to be highly volatile ahead of the F&O expiry on Thursday.
Meanwhile, most Asian markets were trading with losses and Europe too opened lower. The German DAX, the French CAC and the UK's FTSE were all down.