Heavy selling in major bank stocks and continued foreign fund withdrawals fueled the fall.
On Tuesday alone, foreign investors sold off nearly ₹4,700 crore in shares, even as domestic investors tried to balance things out by buying more.
Most stocks fell, with individual names such as Sun Pharma and NTPC among the gainers, while oil prices dipped slightly amid all this uncertainty.
Global instability is contributing to increased volatility in several markets.