The Sensex and the Nifty fell for a fifth consecutive session on Tuesday after earlier hitting their weakest in more than three months as oil producers such as Oil and Natural Gas Corp extended falls after crude prices tumbled to seven-year lows.
Sustained foreign fund outflows too hit the domestic sentiment.
The benchmark BSE index ended the session down by 219.78 points or 0.86 per cent at 25,310.33. Similarly, the broader NSE index fell 63.7 points or 0.82 per cent to 7,701.70.
All BSE sectoral indices ended in the red. Among them, realty index fell the most by 3.69 per cent, followed by metal 3.25 per cent, infrastructure 2.46 per cent and oil & gas 2.14 per cent.
Oil producers led the decliners, with ONGC losing 3.57 per cent, having earlier hit its weakest since May 2009.
Broadly, foreign-owned blue chips were also lower, with HDFC Bank down 1.23 per cent and Larsen & Toubro down 1.41 per cent.
Top five Sensex losers were GAIL (-5.05%), Vedanta (-4.6%), Hindalco (-4.35%), Tata Steel (-3.61%) and ONGC (-3.57%), while the major gainers were Tata Motors (+0.74%), Bajaj Auto (+0.55%), ITC (+0.53%) and TCS (+0.23%).
Crude oil
Crude prices have remained under pressure as global oversupply has been compounded by the Organization of the Petroleum Exporting Countries' (OPEC) decision last week to keep output high, though on Tuesday they edged away from seven-year low.
At the same time, emerging markets are bracing for the Fed to raise interest rates for the first time in nearly a decade after its two-day meeting on December 15-16.
FII selling
Foreign investors have sold a net $1.6 billion in shares since the start of November, though they remain buyers of $3.3 billion so far this year.
"The weakness in crude is good for India. But the global weakness in commodities indicates that the global growth could slow down further," said HDFC Securities in an email to clients.
Early trade
The 30-share index dropped 98.89 points or 0.38 per cent at 25,431.22 in early trade with metal, consumer durables, healthcare, PSU, capital goods and banking sector stocks, leading the slide.
The gauge had cumulatively lost 639.30 points in the last four sessions.
In a similar fashion, the broad-based National Stock Exchange index Nifty slipped by 31.30 points 0.40 per cent to 7,734.10.
Brokers said sentiment took a hit on sustained foreign fund outflows and a weak trend in other Asian markets, tracking overnight losses in the US after oil sank to a seven-year low as OPEC decided not to slash output.
Besides, absence of positive cues too had a negative impact, they added.
Global markets
European shares fell in early trading on Tuesday, with French advertising group Publicis sliding on concerns of losing some contracts.
The pan-European FTSEurofirst 300 index was down 0.7 per cent at 0825 GMT.
The MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.2 per cent, erasing the gains made earlier this month, with Hong Kong shares leading declines with a fall of 1.8 per cent.