Indian shares continued to trade in negative terrain in late morning deals amid profit booking in index heavyweights following a six-day rally.
Meanwhile, investors waited for the outcome of the European Central Bank meeting scheduled later today and amid looming concerns over US fiscal cliff issue.
By 11:40AM, the Sensex was down 51 points at 15,855.12 and the Nifty declined 29 points to 5,737.
On the global front, the Dow industrials lost more than 300 points in a sell-off on Wednesday that drove all major stock indexes down over 2% in the wake of the presidential election as investors' focus shifted to the looming "fiscal cliff" debate and Europe's economic troubles.
The European Central Bank President Mario Dragio will unveil monetary policy today amid expectations the central bank may maintain key interest rates at 0.75%.
Asian shares extended losses on Thursday as investors worried about the fiscal crisis in the United States and the European economy's further deterioration, underpinning the safe-haven dollar and yen as well as U.S. Treasuries on safety bids.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.9%, retreating from a near eight-month high on Wednesday.
Japan's Nikkei average dropped 1.3% to a one-week low as the yen firmed, weighing on exporters.
Back home, the rupee was down 27 paise to Rs 54.47 against the US dollar on global risk aversion.
On the sectoral front, BSE Power, IT, TECk and Capital Goods indices have slumped by almost 1% each. However, BSE Auto index has gained by nearly 1% each.
Reliance Industries, the company with second-highest weightage on Sensex fell 1%. The central information commission (CIC), the apex body under the Right to Information (RTI) Act, 2005 has directed the Securities and Exchange Board of India (Sebi) to share the details of several entities that were involved in the Reliance Petroleum Insider trading case in 2007. The commission also directed the market regulator to give the details of file notings on the consent order..
According to AK Prabhakar, senior vice-president (retail research) at Anand Rathi, "Indian shares rose yesterday after Obama re-election news but fell today as global markets were weak. Our markets are driven mainly by FII inflows so if US market corrects further by 2-3% than our market won't be stable."
Tata Power was down over 2%. According to reports, delay in commissioning of gas pipelines passing through Odisha seems to have poured cold water over Tata Power's plan to set up a gas-based power plant in the state.
Other notable losers include ICICI Bank, GAIL, L&T, HDFC, BHEL, SBI and NTPC
On the winning side, Tata Motors, country's biggest car maker by revenue jumped 4%, on higher sales of JLR. Sun Pharmaceuticals, country's biggest drug-maker, was up 1.7% on hopes of demand optimism from US.
The broader indices have outperformed the benchmarks. The market breadth remains marginally weak with 744 declining and 609 shares advancing on the BSE.
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