Fresh capital outflows from foreign funds also affected the market sentiment, brokers said.
India's largest software services exporter by revenues Tata Consultancy Services lost 3.82 per cent to Rs 1,225.25 and was the top loser from the 30-scrip BSE index, Sensex.
Meanwhile, FIIs sold shares worth Rs 630.81 cr yesterday as per provisional data from the stock exchanges.
Sensex resumed slightly higher at 16,915.71 but fell immediately to 16,744.40 before quoting at 16,771.63 at 1015hrs, down 141.08 points or 0.83 per cent.
The NSE 50-share index Nifty also moved down by 41.25 pts or 0.81 per cent to 5,072.90 at 1015hrs.
Other major losers were Wipro (2.46 pc), Infosys (2.25 pc), BHEL (2.20 pc), Tata Motors (1.98 pc) and RIL (1.66 pc).
However, most Asian markets were higher in the early trade after yesterday's slide. Key indices in Indonesia, Hong Kong, Singapore, Taiwan, Japan and South Korea rose up to 0.62 per cent, while China's Shanghai Composite declined by 0.65 per cent.