The 30-scrip Sensex resumed lower at 18,590.07 and fell to 18,439.06 before quoting at 18,485.84 at 1030 hrs, a net loss of 133.03 points, or 0.71 per cent, from its last close.
The NSE 50-share Nifty also declined by 40.55 points, or 0.72 per cent, to 5,626.30 at 1030 hrs.
Major losers were Sun Pharma (2.43 per cent), Infosys (2.14 per cent), ITC (1.87 per cent), TCS (1.78 per cent), Wipro (1.66 per cent), Tata Motors (1.60 per cent) and Sterlite Inds (1.49 per cent).
Asian stocks edged lower early trade amid concern the US budget standoff will curb economic growth.
Key benchmark indices in China, Hong Kong, Singapore and Taiwan shed between 0.25 per cent to 1.47 per cent, while Japan's Nikkei Average rose 1.12 per cent on speculation a possible change of government in Japan.