The fall was led by Reliance Industries, which declined to a 52-week low on sustained selling. Besides, the banking sector stocks fell as inflation rose during April, reducing chances of a cut in interest rates.
The Sensex, which has lost nearly 620 points in the last four sessions, fell further by 77.14 points, or 0.47 per cent, to 16,215.84.
Traders said selling emerged as inflation moved up to 7.23 per cent in April from 6.89 per cent in March.
The broad-based National Stock Exchange index Nifty fell by 21.10 points, or 0.43 per cent, to 4,907.80, led by refinery, banking and realty sector stocks.
Sensex heavyweight RIL tumbled by 2.32 per cent to Rs 681.15, while shares of country's largest lender State Bank of India fell 0.65 per cent to Rs 1,840.20 and HDFC Bank declined 2.02 per cent to Rs 500.50.
Other losers of the index kitty were BHEL, DLF, ICICI Bank, ONGC, Tata Motors, Tata Steel, Tata Consultancy Services, Sterlite Industries, HDFC Ltd, NTPC and Jindal Steel.
The oil and gas sector index suffered the most with a loss of 1.69 per cent to 7,420.47, followed by banking index fell by 1.61 per cent to 10,661.64.
Realty index lost 1.27 per cent to 1,541.89 and Power index by 0.79 per cent to 1,808.48.
Bucking the trend, Larsen and Toubro gained 1.84 per cent to Rs 1,159.80 on fresh buying following strong quarter earnings.
