The BSE Sensex ended at 16,462, down 314 points and the Nifty went below the 5,000 mark and ended at 4,935, down 96 points.
RIL accounted for an 84-point loss to the Sensex while ITC accounted for a 34-point loss.
During the day, the BSE benchmark index had touched a high of 16,807 and a low of 16,409.
Asian shares remained wobbly as doubts deepened about Europe's ability to stop its sovereign debt crisis from spinning out of control, with Germany and France split over the European Central Bank's bond buying role.
While Hang Seng shed nearly 1%, Shanghai Composite shut marginally down and the Nikkei index ended marginally higher.
European stocks fell, led lower by banks as Spanish bond yields hit euro-era highs, adding to concerns that the euro-zone debt crisis may be spreading, ahead of some key bond auctions France and Spain.
At 1532 IST, the DAX, the CAC 40 and FTSE 100 had shed nearly 1% each.
Meanwhile, on the economic front, the government released the inflation data for the week ended November 5. The primary article inflation eased to 10.39% versus 11.43% on a weekly basis.
Food article inflation came in at 10.63% versus 11.81% and the fuel group inflation was at 15.49% compared to 14.5%.
With food inflation easing by over a percentage point, Finance Minister Pranab Mukherjee today said if the trend continues, "some relief" can be expected on the price front.
Among the sectoral indices, weakness persisted through-out all the sectors. BSE Oil & Gas, Power and Metal indices, down 3% each, led the losses.
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