Market benchmark Sensex slumped for a second straight day as it fell by 266.44 points to 24,020.98 on sustained exodus of global investors from risky assets while IT stocks tanked after Cognizant lowered revenue guidance for the year.
Besides, the broader NSE Nifty cracked below 7,300-level.
Shares of drug maker Dr Reddy's fell by nearly 4 per cent after the company's third quarter earnings failed to meet market expectations. It posted a marginal rise in net profit at Rs 579.2 crore for the quarter ended December 31, hit by weak sales in emerging markets like Russia and CIS nations.
Punjab National Bank plunged by nearly 7 per cent after reporting a whopping 93.41 per cent decline in profit for the third quarter.
Global cues were also muted as Japan's Nikkei nosedived nearly 5.50 per cent. China and Hong Kong remained closed for their annual holiday.
"Further, weak quarterly earnings of key corporate, global economic growth prospects and continued selling by foreign portfolio investors raised worries in the minds of investors," said Gaurav Jain Director of Hem Securities.
However, good GDP growth numbers failed to lift the mood, he added.
While releasing the GDP numbers for the third quarter yesterday, the government had said that Indian economy will grow at a 5-year high of 7.6 per cent in the fiscal ending March, overtaking a slowing China.
The benchmark BSE Sensex resumed lower at 24,076.85 and dropped further to 23,919.47 before ending at 24,020.98 -- the lowest closing since January 21 -- showing a loss of 266.44 points or 1.10 per cent.
The NSE 50-share Nifty also dropped by 89.05 points or 1.21 per cent below the key 7,300-level to 7,298.20.
Disappointing corporate earnings and fears of a global slowdown forced investors to dump risky assets and move to safe haven options.
Domestic gold prices soared by Rs 710 to regain the Rs 28,000-mark and was trading at its highest level in more than one-year on bullish trend in global markets.
IT stocks came under heavy selling pressure, falling by up to 5 per cent, after Cognizant gave a lower revenue guidance for 2016.
Shares of Tech Mahindra fell by 4.89 per cent and HCL Technologies was down 4.52 per cent on BSE. Among others, TCS went down by 3.68 per cent, Infosys lost 3.46 per cent and Wipro fell by 1.72 per cent.
Overseas, Japanese shares fell sharply, joining overnight sell-off in US. Europe was also lower with key indexes in France, Germany and the UK down by up to 1 per cent.
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In mainland China, the Shanghai Composite closed 1.34 per cent lower. Other indices like Japan, Taiwan and Hong Kong moved down by up to 0.84 per cent.
Pramit Brahmbhatt of Veracity Financial Services said, "Nifty opened on a negative note gap down by 49 points at 7,436 levels. However, it recovered afterwards to 7,539 before ending at 7531.80 on short-covering mainly in auto and realty stocks."
The market breadth turned positive as 1,390 stocks ended higher and 1,204 closed lower while 123 ruled steady.
The total turnover went down to Rs 2,675.79 crore, from Rs 4,898.05 crore yesterday.
