Financial stocks led a broad decline as investors turned cautious on the back of mixed earnings outcome. FMCG, auto, technology and infra-related stocks, too, were impacted by heavy selling.
The 50-share Nifty plunged by 70.10 points, or 0.90 per cent, to conclude at 7,721.30 after hitting an intra-day low of 7,711.15.
Squaring-off short positions by traders on account of expiry in the derivative segment led to volatility.
Moreover, the US Fed's decision to reduce its monthly bond-buying programme by another USD 10 billion against the backdrop of solid American economic growth data further dampened the sentiment.
Foreign portfolio investors sold shares worth a net Rs 381.66 crore yesterday, as per provisional data from the stock exchanges.
Meanwhile, other Asian equities ended mixed on the back of profit-taking after recent rally despite overnight data showing the US economy has rebounded sharply, with the gross domestic product expanding at forecast-beating 4 per cent in the second quarter.
The major index laggards included NTPC, IDFC, Asian Paints, Axis Bank, HCL Tech, PNB, Kotak Bank, HDFC, Bank of Baroda and M&M.
Cipla, Tata Steel, BPCL, Lupin, Bajaj Auto, GAIL and Bharti Airtel were among the stocks that bucked the trend and posted gains.
Turnover in the cash segment was substantially higher due to heavy transaction on the last date for settlement in F&O contracts, and shot-up to Rs 22,637.67 crore from Rs 18,465.01 crore yesterday.
A total of 10,892.72 lakh shares changed hands in 79,02,415 trades. Total market capitalisation stood at Rs 88,31,139 crore.