November Inflation numbers came in at 9.11% vs 9.73% and 8.2%.
The food inflation tumbled to 8.54% in November from more than 11% in October, while fuel inflation increased to 15.48% from 14.79% and manufacturing inflation increased marginally, to 7.7% from 7.66%.
The above expected November inflation has created fears of rate hike by the RBI on the Monetary Policy to be announced on Friday.
The Bombay Stock Exchange's 30-share Sensex closed at 15,881 down 121 points.
The National Stock Exchange's 50-share S&P CNX Nifty closed down 37 points at 4,763.
On the global front, Asian markets ended marginally lower. European markets were trading dismal.
The euro hit 11-month lows and European stocks fell on Wednesday after the US Federal Reserve warned Europe's unresolved sovereign debt crisis could hurt the giant American economy.
The CAC, DAX and the FTSE were all down nearly 1%.
Back home, Metal shares were also among the top losers. BSE Metal index tumbled by 2%.
Tata Steel melted by 4%. Coal India, Hindalco, JSW Steel and Sterlite fell between 1-3%. Steel stocks were down because demand of steel has fallen below GDP growth for the first time.
Oil marketing companies such as BPCL, Essar Oil, GAIL India, HPCL, IOC and ONGC submerged between 1-4%. OMCs dropped as crude oil crosses $100 a barrel mark.
Index heavyweight RIL ended marginally lower.
Sources informed that Petrol prices may be hiked by Rs 0.65 per litre this week if state-owned oil firms manage to get political approval for the move.
Among Power sector, Tata Power declined 4% followed by NTPC, declining by 2%.
HDFC fell by 3%.
Bharti Airtel gained 1% after Bharti Telecom, the largest promoter group of Bharti Airtel, purchased shares of the company worth Rs 20.50
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