Besides, selling in financial, bank and consumption stocks amid ongoing weakness in the rupee also added to the pressure in the markets.
Stock market benchmarks ended with losses for the third straight session on Wednesday as heightened geopolitical tensions, weak global peers and persistent foreign fund outflows unnerved investors.
Besides, selling in financial, bank and consumption stocks amid ongoing weakness in the rupee also added to the pressure in the markets.
Recovering most of its sharp intra-day losses, the 30-share BSE Sensex settled 270.84 points or 0.33 per cent lower at 81,909.63.
The benchmark tanked 1,056.02 points, or 1.28 per cent, to 81,124.45 during the day.
The 50-share NSE Nifty declined 75 points or 0.30 per cent to 25,157.50.
From the 30-Sensex firms, ICICI Bank, Trent, Bharat Electronics, Axis Bank, HDFC Bank, Larsen & Toubro, State Bank of India and Maruti were among the biggest laggards.
In contrast, Eternal, UltraTech Cement, InterGlobe Aviation and Reliance Industries were among the gainers.
Foreign institutional investors offloaded equities worth Rs 2,938.33 crore on Tuesday, while Domestic Institutional Investors (DIIs) bought stocks worth Rs 3,665.69 crore, according to exchange data.
"Indian equity markets ended the session on a cautious to negative note as mixed cues from Asian peers and sharp losses in overseas markets, along with continued weakness in the rupee, kept investor risk appetite subdued," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
In Asian markets, Japan's Nikkei 225 index settled lower, while South Korea's Kospi index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index ended higher.
"Domestic markets were gripped by volatility as global risk factors dampened sentiment.
"However, value buying towards the close helped the market recover some early losses.
"The weakening rupee and uncertainties surrounding trade ties may prolong this volatility," Vinod Nair, Head of Research, Geojit Investments Limited, said.
Brent crude, the global oil benchmark, dropped 1 per cent to $64.27 per barrel.