The broader NSE Nifty also broke below the 7,300-mark.
Profit-booking in blue-chips after early gains, caution ahead of earnings announcement from more key corporates and further weakening of the rupee, which again breached the 68 mark against the dollar also took its toll.
Meanwhile, crude oil resumed its slide from USD 28 a barrel to hit fresh multi-year lows.
Resuming higher at 24,194.75, the BSE Sensex touched the session's high of 24,351.83 in early trade on the back of value-buying in recently battered blue chips.
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The 50-share NSE Nifty cracked below the 7,300-level by ending 32.50 points or 0.44 per cent down at 7,276.80, its lowest closing since May 30, 2014.
Out of the 30-share Sensex pack, 16 closed fell, while Bharti Airtel ended steady.
From the Sensex kitty, Maruti Suzuki was the worst-hit, down 4.11 per cent, followed by Dr Reddy's at 3.86 per cent.
Private lender Axis Bank climbed the most at 5.21 per cent to Rs 408.90 after the company reported a 15 per cent growth in December quarter net profit.
Wipro, Infosys, SBI, Tata Steel, ICICI Bank, Adani Ports, HDFC Bank, Asian Paints, NTPC and BHEL were other winners.
Sector-wise, the BSE auto index took the biggest blow, down 1.86 per cent, followed by oil&gas (1.54 pc), healthcare (1.53 pc), FMCG (1.41 pc), metal (1.24 pc), PSU (1.02 pc) and capital goods (0.98 pc).
Asian shares closed lower, with Shanghai index plunging 3.23 per cent, while Japan's Nikkei ended 2.43 per cent lower. Hong Kong's Hang Seng index shed 1.82 per cent.
European shares rose after the region's stocks fell the most yesterday since August last year.