Markets fell for the second day this week; the Bombay Stock Exchange (BSE) Sensex dipped 324.12 points, or 2.31 per cent, to close at 13,736.54.
Broad-based Nifty index on National Stock Exchange also dipped 59.40 points to close at 4.210.90.
Among the BSE sectoral indices, the BSE CG index, Bankex and Auto index dropped 5.41 per cent, 2.91 per cent and 2.07 per cent respectively.
Overall market breadth on BSE remained strong with 2,098 advances, 626 declines and rest of the scrips remained neutral out of 2,766.
ONGC (8.41 per cent), Reliance Communications (4.52 per cent), Ranbaxy Labs (2.66 per cent), NTPC (1.87 per cent) and Reliance Infra (1.36 per cent) were the top Sensex gainers.
Markets @ 01.05 PM
The BSE Sensex turned positive in afternoon trade on Thursday, rising from earlier losses of 1.5 percent on select buying by foreign funds, traders said.
At 1:08 p.m. (0738 GMT), the 30-share BSE index was up 0.16 percent at 14,082.99 points, with 13 stocks gaining.
The 50-share NSE index was up 0.88 percent at 4,307.90 points.
Markets @ 11.15 AM
The BSE Sensex fell 1 percent on Thursday as investors took profits for a second day after the market leapt 17.5 percent in two days, with weak Asian peers also encouraging unwinding of long positions.
Traders said the market had run up too fast after the ruling coalition scored an unexpectedly easy victory in national elections on the weekend.
"The initial euphoria after the election results is getting over. Now the market has to face reality," Deven Choksey, chief executive of K.R. Choksey Shares and Securities, said.
By 11:18 a.m. (0548 GMT), the 30-share BSE index was down 1 percent at 13,914.44 points, with 17 stocks declining.
Engineering conglomerate Larsen & Toubro and government-run firms such as State Bank of India led the drop, after soaring about 36 percent over three days on hopes the government will push asset sales and infrastructure spending.
Financials such as ICICI Bank and HDFC Bank fell as optimism over the global economic recovery waned after the U.S. Federal Reserve cut economic growth
forecasts.
There are concerns the market is overbought as the index has risen by about three-quarters from 2009 lows in early March, sparking expectations for a consolidation in the short term.
Investors will be watching inflation, which is expected to have risen in early May due to a rise in prices of some primary articles and manufactured goods. The data is due around midday (0630 GMT).
Private-sector lender ICICI Bank fell 3.6 percent to 683.05 rupees and rival HDFC Bank dropped 1.4 percent to 1,355.30 rupees.
Larsen & Toubro shed 4.3 percent to 1,301 rupees, while top lender State Bank of India eased 3.2 percent to 1,722.50 rupees as analysts believe moves such as privatisations and an increase in infrastructure spending will take time.
In the broader market, gainers led losers in the ratio of 7:1 on heavy volume of 277 million shares.
Asian shares were weaker after a drop on Wall Street overnight. Japan's Nikkei was down 0.8 percent, while MSCI's measure of other Asian markets fell 0.5 percent.
The 50-share NSE index was down 0.3 percent at 4,259.35.
MAIN TOP 3 BY VOLUME
* Ispat Industries on 8.8 million shares
* Reliance Natural Resources on 7 million shares
* Nagarjuna Fertilisers on 6.5 million shares
STOCKS ON THE MOVE
* Top telecoms firm Bharti Airtel rose 1 percent to 867.50 rupees after its deputy CEO told Reuters late on Wednesday it does not expect the entry of new players in an already competitive market to drastically push down mobile tariffs.
* Radio broadcaster Entertainment Network (India) fell 6.9 percent to 217.15 rupees after its quarterly net profit slumped 74 percent from a year ago.
Markets @ 10.00 AM
Indian shares opened down on Thursday as investors took profits after a 17.5% post-election rally earlier this week.
At 9:57 a.m. (0427 GMT), the 30-share BSE index was down 0.51% at 13,988.41 points, with 21 stocks losing.
The 50-share NSE index was down 0.38% at 4,253 points.
