The Sensex falls 0.86 percent and the Nifty slips 0.82 percent. Domestic shares fall in line with weak global shares that fell on market talk that a hedge fund had been liquidating large positions in commodities, as well as worries the Federal Reserve could slow its bond buying program.
The MSCI's broadest index of Asia-Pacific shares outside Japan tumbles 1.8 percent, Hong Kong shares slides 1.6 percent while Tokyo's Nikkei stock average falls 1.26 percent.
Bank shares lead the falls a day after RBI data showed that loan growth continues to remain a concern. ICICI Bank shares fall 1.6 percent while State Bank of India falls 0.8 percent.
Banks' advances grew 8.7 percent so far this fiscal year, compared with 11.2 percent a year earlier, while deposit growth was 7.8 percent compared with 11.4 percent in the same period a year earlier.
Shriram Transport Finance Co Ltd shares sink 7 percent after U.S. private equity firm TPG Capital planned to sell part of its stake in the company to raise about $300 million, according to a term sheet seen by Reuters.