Key share indices ended the trading session on a lower note led by weakness among index heavyweights, auto, metal and banking shares.
The sentiments were further weighed down by the concerns over global growth recovery coupled with US fiscal cliff tensions and bailout uncertainty of Spain and Greece.
The Bombay Stock Exchange's [ Images ] 30-share sensex closed at 18,471 down 148 points.
The National Stock Exchange's 50-share S&P CNX Nifty closed down 36 points at 5,631.
The Sensex and the Nifty touched an intra-day low of 18,409 levels and 5,604 mark, respectively.
On the global front, Asian stocks fell on Thursday as investors reacted to the prospect of drawn-out negotiations over the looming US "fiscal cliff" by shedding riskier assets, but Japanese equities bucked the trend as a sharp slide in the yen lifted exporters' shares.
European shares fell for a second day running on Thursday, hit by evidence that the debt crisis has slowed euro zone economic activity and by persistent concerns about fiscal problems in the United States.
Economic growth in Germany [ Images ], Europe's largest economy, cooled to 0.2% over the July-September period compared with the previous three months, while data due later is expected to show the wider euro zone has slipped back into recession.
Back home, the rupee fell against the American currency on sustained dollar demand from banks and importers amid weakness in local equities.
On the sectoral front, BSE Metal and IT indices plummeted by almost 2% followed by counters like FMCG, Auto, Healthcare, Oil & Gas, PSU and TECk, all declining by 1% each.
However, BSE Consumer Durable and Realty indices gained by nearly 2% each.
Software shares like Wipro [ Get Quote ], Infosys [ Get Quote ] and TCS [ Get Quote ] plunged by 2% each on concerns over outsourcing orders from US-based clients as world's biggest economy struggled to fight tax issue with the Congress.
Index heavyweight Reliance [ Get Quote ] Inds slipped nearly 1% as the company reported a further decline in natural gas production from its eastern offshore KG-D6 fields.
Metal stocks lost ground after LMEX, a gauge of six metals traded on the London [ Images ] Metal Exchange dropped 0.3% on Thursday. Tata Steel [ Get Quote ], Jindal Steel, Sterlite and Hindalco [ Get Quote ] melted between 2-3%.
Auto majors like Tata Motors [ Get Quote ], Hero Moto, M&M and Bajaj Auto [ Get Quote ] slipped between 1-2%.
According to reports, Tata Motors Ltd's global vehicle sales rose 6% in October from a year earlier, the Indian company said, with sales at its key Jaguar Land Rover [ Images ] subsidiary rising 7%, after falling in September for the first time in 14 months.
Banks which are a proxy to the economy also faced the brunt of selling pressure. SBI [ Get Quote ], HDFC Bank [ Get Quote ] and ICICI Bank [ Get Quote ] declined between 0.5-1%.
Other notable losers included ITC, Sun Pharma [ Get Quote ], ONGC [ Get Quote ], Dr Reddy's and Cipla.
On the gaining side, Bharti Airtel [ Get Quote ] and Idea Cellular [ Get Quote ] gained by almost 3% after winning bids in the second-generation (2G) mobile-phone airwaves auction process.
The much awaited 1,800-MHz 2G spectrum auction ended on the second day on Wednesday, with the government managing to rake in a dismal Rs 9,407 crore as against the expected Rs 40,000 crore.
Meanwhile, the broader indices out performed the benchmark indices.
BSE Midcap index plunged by 0.17% whereas BSE Smallcap index closed marginally higher.
The market breadth in BSE ended unhealthy with 1,631 shares declining and 1,196 shares advancing.
GMR Infrastructure Ltd [ Get Quote ], the operator of Indira Gandhi [ Images ] International Airport in New Delhi [ Images ], slumped nearly 5% on Thursday after posting a threefold increase in net loss at Rs 179 crore for the second quarter ended September 30, compared to the net loss of Rs 62.5 crore for the corresponding period last year.
Wockhardt gained by almost 5% after reporting that its consolidated net profit surged over three-fold to Rs 453.55 crore for the second quarter ended September 30, 2012.
Shares in DLF Ltd rose 3%. The shares had initially slumped after DLF said late on Monday July-September net profit slumped 63% from a year ago, hit by slowing home sales.