In late morning trade, the benchmark had lost over 216 points.
The 30-share gauge opened at 28,867.92 and quickly slipped into the negative zone as cautious investors scaled down their positions and touched a low of 27,633.55 ahead of the release of the Economic Survey.
However, buying activity came back soon after the Survey was tabled in Parliament, which helped the Sensex recover, but was still down 67.51 points, or 0.24 per cent, at 27,782.05 at 1300 hours.
The NSE index Nifty, which hit a low of 8,555.15 in early morning trade, made up some ground to 8,589.40, still lower by 43.35 points, or 0.50 per cent.
The Economic Survey 2016-17, which was tabled in Parliament today, positively influenced market sentiment, brokers said.
The Survey said India's economic growth is expected rebound to 6.75-7.5 per cent in 2017-18 while the GDP growth for the current fiscal has been pegged at 6.5 per cent, down from the earlier 7.6 per cent.