Reuters Market Eye - The BSE Sensex falls 0.86 percent, heading for its biggest single day decline since Feb. 20, while the Nifty is down 0.81 percent.
Interest rate-sensitive stocks such as banks and real estate were trading sharply lower after India's wholesale price inflation hit a three-month high. Traders are bracing next for consumer inflation data after the close of markets.
Other blue chip stocks were also down. Hindalco Industries Ltd was down 3.5 percent, Tata Motors was down 2.4 percent and Housing Development and Finance Co was down 3.2 percent.
However, shares in software exporters were trading higher, with BSE IT index gaining 2.2 percent after Infosys posted better-than-expected earnings. Infosys shares were up 1.7 percent, while Tata Consultancy Services and Wipro were also up 2.2 and 3.1 percent respectively.
Shares in United Spirits Ltd gain as much as 15 percent to a record high of 2,940.80 rupees after Diageo Plc announced a tender offer to acquire up to an additional 26 percent stake in the Indian firm at 3,030 rupees a share. The offer will be launched in June.
(Reporting by Indulal PM)