In addition, rupee depreciated by 35 paise to Rs 64.20 against the dollar in intra-day trade.
    
Key bills, Goods and Service Tax (GST) amendment bill and the land acquisition bill, got stuck in Rajya Sabha, raising fears of further delay in government's economic reforms, traders said.
    
Participants were also cautious ahead of the release of retail inflation data for April and IIP data for March.
    
Globally, volatility in the bond markets weighed on global stocks, adding to investors' anxiety over Greece's finances.
    
Ten-year US Treasury yields hit their highest since early December, while German yields added 8 bps to 0.67 percent.
    
Back home, the 30-share BSE index opened in the negative zone after rallying for the last two days. A major sell-off in blue-chips dragged the index below the psychological 27,000-mark to touch a low of 26,837.39.
    
The index finally settled down by 629.82 points or 2.29 percent at 26,877.48. It had rallied by 908.19 points in the last two session on government's move on MAT issue and hopes of an RBI rate cut.

The 50-issue Nifty slipped below the 8,200-level by falling 198.30 points or 2.38 percent to close at 8,126.95. Intra-day, it moved between 8,326.65 and 8,115.30.
    
Of 30-Sensex stocks, 28 ended lower, while Dr Reddy's and Hero MotoCorp managed to finish in the green.
    
Dr Reddy's rose 3.31 percent after it reported a 7.73 per cent rise in its consolidated net profit to Rs 518.84 crore for the quarter ended March 31.
    
Tata Steel was the biggest loser among Sensex stocks by tumbling 6.29 percent, followed by BHEL 5.07 percent. Vedanta (formerly Sesa Sterlite) lost 4.98 percent.
    
The broader markets too saw selling activity. The BSE mid-cap and small-cap indices ended lower by 1.72 percent each.
    
Meanwhile, stock markets in Asia ended with a mixed bias and European markets were trading lower in their morning session.

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