Shares weakened slightly in volatile trade on Tuesday, as gains in autos and banks were offset by IT, with decline in Asian shares aiding fall.
Nifty was down 0.4% at around 17,420 in early trade, after having opened as much as 0.6% higher. Sensex fell 0.4% to around 58,530.
Nifty had risen 4.6% this month until 18 August, after which investors began to book profits. The index shed 2.6% in the last two sessions.
"The correction was very sharp in the last few days and this isn't a trend reversal. Market is moving down," said AK Prabhakar, head of research at IDBI Capital, adding that there was pressure on both ends with the derivative expiry on Thursday.
Sentiment was bearish, as Asian shares fell for a sixth straight session after a renewed spike in European energy prices stoked fears of recession.
Higher US treasury bond yields and slump in the euro to 20-year lows further pressured markets.
IT stocks weighed down stocks in India, with the Nifty IT falling 1.7%. Infosys fell 2% and was the top percentage loser on the Nifty.
A media report said the IT major had reduced average variable payout to 70% for the first quarter on margin pressure.
Nifty Energy was down 1.2%.
Among gainers, the Nifty Auto was up as much as 1.5%. Mahindra and Mahindra and Ashok Leyland were up 1.5% each.