The BSE Sensex fell 1.52 percent on Thursday as state-run banks slipped over concerns of greater borrowing and inflation following the union budget.
The 30-share benchmark index ended 290.87 points lower at 18,861.54 with 24 of its components closings in the red.
The broader 50-share National Stock Exchange (NSE) Nifty index ended 1.79 percent or 103.85 points lower at 5,693.05 on Thursday.
The government´s move to raise taxes on the rich and large companies and other measures in the budget dampened investor sentiment.
Meanwhile on the New Delhi bullion market, gold fell by Rs 180 to Rs 30,150 per 10 grams while silver lost Rs 335 at Rs 55,265 per kg.