Shares edged lower on Thursday, heading towards their third straight session of falls as technology stocks fell on caution ahead of Tata Consultancy Services Ltd's earnings later in the day.
The April-June earnings season is expected to start on a muted note with earnings of IT companies such as TCS, which is India's biggest software services exporter, expected to be hurt by client-led delays and the dollar's strength.
Exporters were also weighed down by the ongoing volatility in global markets amid the stocks slump in China and Greece's debt crisis.
The NSE's sub-index for software companies was down 1.7 per cent.
"I think the buying interest is not coming, in light of the kind of global onslaught happening in equity markets," said Deven Choksey, managing director of KR Choksey Securities.
Choksey said the performance of the Indian IT sector would be muted for some time.
The Sensex ended down 114 points at 27,573.66 while the NSE Nifty fell 34.50 points to 8,328.55.
However, most Asian shares rose on Thursday as battered Chinese markets rebounded after its securities regulator barred shareholders with stakes of more than 5 percent from selling shares for the next six months.
Software stocks led the declines. Infosys Ltd was down 1.8 per cent, TCS fell 2.5 per cent and HCL Technologies lost 1.6 per cent.
Essar Oil ended down 6 per cent as Rosneft's plan to buy a stake in the company's Vadinar refinery disappointed investors, who had expected it to buy a stake in Essar Oil.
Tata Motors Ltd was down 1.6 per cent after Wednesday's 6 per cent slump on continued worries over unit Jaguar Land Rover's sales in China amid the stock market rout there.
Among the gainers, Bhushan Steel Ltd surged 20 per cent, hitting its daily upper limit, on news that majority of its lenders had approved a plan to recast its debt.