Equity benchmark indices erased all early gains on Wednesday and closed nearly one per cent lower as the government eased some restrictions after extending the COVID-19 lockdown till May 3.
A day earlier, the International Monetary Fund (IMF) slashed this year's growth projection for India to 1.9 per cent from 5.8 per cent projected in January.
The BSE S&P Sensex closed 310 points or 1.01 per cent lower at 30,380 while the Nifty 50 edged lower by 69 points or 0.76 per cent at 8,925.
Sectoral indices at the National Stock Exchange were mixed with Nifty financial service down by 2.7 per cent, private bank by 2.1 per cent and auto by 1.8 per cent. Nifty FMCG, however, was up by 4.1 per cent.
Among stocks, Kotak Mahindra Bank dropped by 5.6 per cent to Rs 1,180 per share while HDFC Bank was down by 3.3 per cent. Bajaj Finance slipped by 4.3 per cent, HDFC by 3.5 per cent and index heavyweight Reliance Industries by 2.6 per cent.
The other prominent losers were Hero MotoCorp, Maruti, Mahindra & Mahindra, Titan and Sun Pharma.
However, crop protection chemicals producer UPL Ltd surged by 8 per cent after it said that all its factories around the world are in operation and that it does not see significant challenges in meeting customer demand.
Aluminium producer Hindalco Industries closed 1.1 per cent higher after its arm Novelis completed the 2.8 billion dollar acquisition of US-based rolled products major Aleris.
Meanwhile, Asian share markets too shaved early gains and were on the edge as warnings of the worst global recession since the 1930s underlined economic damage already done even as some countries tried to re-open for business.
Japan's Nikkei was down by 0.45 per cent, Hong Kong's Hang Seng by 1.19 per cent and Shanghai composite by 0.57 per cent. But South Korea's Kospi moved up by 1.72 per cent.
( With inputs from ANI )