Investor sentiment was also dampened after weakening of rupee to a 20-month low (intra-day) faded chances of a rate cut by the RBI at its meeting next month, brokers said.
Global cues, unsettled by sell-off in government bonds, stocks and dollar, also weighed on sentiments, they added.
All the major indices in Asia ended lower, while those in Europe were in the red in their early trade.
"Market continues its consolidation with continuing FII outflows. Q4 earnings are impacting the market sentiments on FY16 outlook and hence the current consolidation could prevail until the extend of downgrading FY16E earnings is understood," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.
The 30-share Sensex today fell 118.26 points or 0.44 percent to close at 26,599.11, its weakest closing since October 21, last year. The gauge shuttled between 26,423.99 and 26,850.37 intraday.
Today is the third straight session of decline with the index having lost 891.48 points in this period.
The NSE Nifty index also ended with a loss of 39.70 points or 0.49 percent at 8,057.30 -- its weakest close since December 17 last year. Intra-day, it dipped below the crucial 8,000-level to touch a low of 7,997.l5.
Meanwhile, the Sensex has retreated by 3,425.63 points or 11.40 percent from record high of 30,024.74 reached on March 4, while Nifty plunged 1,061.90 points or 11.64 percent from its record high of 9,119.20 touched on March 4.
Axis Bank was the biggest loser among 30-Sensex stocks by plunging 2.95 percent followed by ONGC down 2.94 percent to Rs 318.70.
Other losers were Maruti Suzuki with a fall of 2.52 per cent, Hindalco down 2.47 percent, ICICI Bank 2.44 percent, Tata Power 2.32 percent, Dr Reddy's 2.19 percent and Tata Motors 1.90 percent.
Bucking the trend, TCS, Wipro and Infosys ended logged gains, largely supported by weakening rupee.
The broader markets remained under pressure with the BSE midcap and smallcap indices falling up to 1.95 percent.


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