Reuters Market Eye - The broader Nifty falls as much as 1.2 percent to its lowest in almost three weeks while the BSE Sensex is trading almost 230 points down, tracking a tumble in Asian shares.
The MSCI Asia-Pacific index outside Japan is down 1.1 percent.
Investors seek safe-haven assets after U.S. President Obama said he had authorized air strikes in Iraq.
Blue-chip stocks fall: Tata Motors Ltd down 2.2 percent, Bharat Heavy Electricals Ltd down 2.4 percent, and ICICI Bank loses 2.3 percent.
Overseas investors sold shares worth $11.92 million on Thursday, provisional exchange data shows.
However, defensive stocks gain: Dr Reddy's Laboratories up 0.7 percent.
(Reporting by Indulal P)