The benchmark Sensex closed at 40,723.49 lower by 190.33 points or 0.47 per cent while the Nifty closed below the 12,000 point level.
Metal stocks were the top losers as risk to growth continues after the World Health Organisation (WHO) declared the new Coronavirus outbreak a global health emergency after the death toll in China rose to 170, with more than 7,800 cases confirmed in almost 20 countries.
The broader market also witnessed selling pressure with Nifty Midcap 100 down 0.7 per cent while Nifty Smallcap 100 closed flat. Majority of the sectors ended in red except Realty and Banks.
Lakshmi Iyer, CIO (Debt) & Head of Products, Kotak Mahindra Asset Management Company said that the Economic Survey 2020 projects economic growth at 6-6.5 per cent for FY 2021.
"This could be a good indicator of budget being pro-growth as the current GDP growth for FY 2020 is at 5 per cent. Hence it will be key to watch out the fiscal deficit numbers for FY 2021. A very wide variance from the Fiscal Responsibility and Budget Management (FRBM) glide path may disappoint the markets," Iyer added.
Vinod Nair, Head of Research at Geojit Financial Services said: "Investors stayed away from taking fresh positions ahead of the big event. Focus will turn to the Union Budget as all eyes will be on how Centre is going to bring growth as any increase in spending would result in widening of fiscal deficit. Global economy is also on the edge with slow growth fears significantly high after the outbreak of the virus."
( With inputs from IANS )