However, a fall in international crude oil price arrested what could have been a sharper decline.
Heavy selling pressure was witnessed in the IT counters, which fell over 3 per cent, followed by Teck (technology, entertainment and media) and energy stocks.
Consequently, the S&P BSE Sensex settled down 274.71 points or 0.77 per cent at 35,119.80, from its previous close of 35,474.51 points.
Similarly, the NSE Nifty50 lost 56.15 points or 0.53 per cent to finish at 10,600.05 points.
The overall market breadth was flat and the broader market indices like Mid and Small-cap segments of the NSE closed higher by 0.50 per cent and 0.48 per cent respectively.
Market observers attributed Wednesday’s fall to a sell-off in global stocks, which was triggered by growing concerns about slowing global growth.
“Domestic stocks began the day on a negative note on subdued Asian indices. A sudden sell-off in index pivotals dragged the indices to intra-day lows in morning trade,” said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
“Despite a subsequent mild recovery, the benchmark indices continued to trade under pressure and finally closed the day with losses of over 0.50%.”
Vinod Nair, Head of Research, Geojit Financial Services, said: “Market traded on a weak note despite a positive opening in European market and further slide in oil prices.”
“A rebound in PSU banks due to extension of the timeline for the full implementation of Basel 3 norms, and gains in pharma stocks helped the market trim some losses in early hours of trade. However, continued selling in IT stocks on account of a strong rupee restricted the recovery.”
The Brent crude oil price fell below $64-per-barrel mark.
“Crude oil prices are falling as US inventories rose last week. US inventories are at their highest level since 2015. Crude oil remains under pressure amid expectations of slowing global demand,” Anuj Gupta, Deputy Vice President, Research, Commodities and Forex, Angel Broking, told IANS.
The short-term trend of the Nifty has turned weak.
“The Nifty is currently placed at the key lower support of 10,620-10,558 levels, as per the concept of change in polarity,” said Deepak Jasani, Retail Research Head, HDFC Securities.
“As long as this support holds, there is a possibility of a bounceback. Support on breach of these levels could come in at 10,452.”
In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold stocks worth Rs 1,652.04 crore on Wednesday while the domestic institutional investors bought scrips worth Rs 606.73crore.
Top gainers on the Sensex were Yes Bank, up 2.83 per cent at Rs 198; Axis Bank, up 2.20 per cent at Rs 626.35; Adani Ports, up 1.91 per cent at Rs 360.90; Asian Paints, up 1.25 per cent at Rs 1,322.90 and State Bank of India (SBI), up 1.24 per cent at Rs 286.55.
The laggards were Tata Consultancy Services (TCS), down 3.51 per cent at Rs 1,811.75; Infosys, down 3.14 per cent at Rs 620.95; Power Grid, down 2.74 per cent at Rs 182.85; Wipro, down 2.38 per cent at Rs 314.05, and Reliance Industries, down 2.31 per cent at Rs 1,112.30 per share.