The 30-share Sensex ended down 78 points at 15,948 and the 50-share Nifty down 25 points at 4,836.
The rupee slumped to a new record low of 56.19 to the dollar in intra-day trade on Wednesday so far weighed down by global risk aversion, with the Reserve Bank of India's intervention earlier in the day seen as too mild to prevent further falls.
On the global front, Japan's Nikkei share average shed 2% on Wednesday to a four-month closing low as exporters took a beating on a firmer yen after the Bank of Japan's latest statement raised doubt about its commitment to easing monetary policy.
The BOJ dropped from its latest statement a line that the central bank will pursue powerful monetary easing, saying instead it will conduct appropriate policy, sending the yen higher against the dollar.
Key European share indices ended a two-day rally and safe-haven assets such as the dollar rose on Wednesday, as investors doubted any new measures to tackle the euro-zone debt crisis would emerge from a European leaders summit and on renewed talk of a Greek exit.
European markets were trading weak with CAC, DAX and FTSE declining tween 1-2%.
Back home, BSE Consumer Durable index has tumbled by over 2% followed by Capital Goods and Realty down nearly 1% while Metal and Auto indices ended down 0.7%
Markets end higher led by SBI
Markets end flat amid weakening rupee
Markets end higher led by TCS
Markets begin May series on a flat note
Get savings account at click of a mouse