Weakness in global equities also dampened the sentiment.
"After slight disappointment from the Rail Budget, the market prices today reflected investors' diminishing expectations for strong measures from the government in tomorrow's Union Budget," said Rakesh Goyal,Senior Vice President, Bonanza Portfolio.
Auto, power, realty, pharma, capital goods and IT shares were at the receiving end while refinery, consumer durable and FMCG counters attracted good buying support.
Yesterday, it fell 517.97 points, or 1.98 per cent, logging its biggest single-day drop in ten months. Today's Sensex closing value is the lowest since 25,413.78 (June 30).
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The Economic Survey 2013-14 presented by Finance Minister Arun Jaitley in Parliament said GDP growth is seen at 5.4-5.9 per cent in 2014/15. It also called for fiscal consolidation through higher tax-GDP ratio and subsidy reforms.
"Before the Union Budget, investors took note of Economic Survey which highlighted inflation & growth concerns. And, preferred to book some profits off the table and wait for further clarity," said Jayant Manglik, President-retail distribution, Religare Securities.
Fall in the index-based counters like TCS, Tata Motors, L&T, ICICI Bank, Infosys, M&M, HDFC, Bajaj Auto and Maruti Suzuki mainly contributed to the Sensex slide.
Asian stocks ended lower triggered by concerns that equity valuations are too high. European indices were trading lower in early trade.