The 30-share barometer, which opened 84.35 points lower than yesterday's close, dipped below the 17,000 mark, losing 271.85 points at 16,879.34 at 1315 hrs.
The 50-scrip National stock Exchange index, Nifty, was down 86.75 points at 5,101.65.
The market decline was led by capital goods, realty and banking stocks.
Brokers said investor sentiment has turned weak on disappointing corporate earnings and the weakening rupee which has fallen to over 4-month low against the US dollar.
Besides, they said, the trend in global markets was also weak.