Reuters Market Eye - The 50-share Nifty is down 0.54 percent, breaking below its 200-day moving average, while the benchmark Sensex is down 0.49 percent.
The Sensex touched its lowest intraday level since November 26, 2012, while the Nifty touched its lowest intraday level since November 23, 2012.
The falls are in line with lower Asian shares on the back of weak euro zone data, a sluggish debt auction in Italy and fears of a potential run on Cyprus's banks.
Trading is expected to remain volatile as Thursday marks the expiry of domestic derivatives at the end of the session.
Traders are awaiting October-December current account and balance of payments data due later in the day. The RBI has said CAD will play a factor in monetary policy decisions.
CAD hit a record high of 5.4 percent in the July-September quarter.
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Titan Industries Ltd shares fall 2.8 percent after 38.78 million shares changed hands at 250.10 rupees in a block deal on the BSE.
(Reporting by Manoj Dharra)