The rupee, which lost ground as much as 23 paise against the dollar intra-day, dampened investor appetite.
As if this was not enough, China manufacturing activity slumped to a 15-month low, making the overall mood cloudy.
The 30-share BSE barometer went down 258.53 points, or 0.91 per cent, to 28,112.31, with all sectoral indices except for consumer durables and FMCG ending in the red.
The gauge has dropped 392.62 points in the past two days.
Also Read
On a weekly basis, the Sensex and the Nifty turned lower by 351 points (1.23 per cent) and 88.30 points (1.02 per cent), respectively.
The fall in indices tracked the continuing stand-off over legislative reforms, including Goods and Services Tax, in Parliament.
Heavyweights ICICI Bank and Reliance bore the brunt ahead of their results announcement slated later for the day, both of which fell up to 4 per cent.
Wipro was down 3.73 per cent after its earnings show failed to enthuse investors.
Broader markets lay low too, with the BSE mid-cap and small-cap indices falling 0.61 per cent and 0.58 per cent, respectively.
Of the 30-share Sensex pack, 21 ended down.
Globally, most Asian markets fell while European stocks were trading up.