Markets finished the session with sharp losses amid selling pressure in late trades after tension gripped Paris in the wake of fresh gun firing.
Meanwhile, weakness in European shares amid fresh developments in Paris and losses in Asian peers tracking weak commodity prices weighed on investor sentiment.
Further, caution was also seen ahead of the Federal Open Market Committee which is scheduled to release the minutes of its last policy meeting held on October 28 later today which would signal the US Fed's stance on interest rates.
The Sensex shed 382 points to close at 25,483 and the Nifty dropped 106 points to finish at 7,732.
The broader market also closed lower with both the BSE Midcap and Smallcap indices down 0.8% each. Market breadth ended lower with 1,050 gainers and 1,609 losers on the BSE.
"In the last 7 trading sessions, Nifty has tested this range of 7800-7700 almost in every trading sessions. Options data indicated at the start of the day today that 7700-8000 could be the range for the rest of the Nov series.
However, with the sharp intraday volatility, we now believe that this range would get shifted to 7600-7900 as the range for the rest of the series. Selling in IT, Pharma, and many other large cap names are adding to the pressure," said Kunal Bothra, Head-Advisory, LKP Securities.
"The approach should be cautious on the markets, and use sharp panics as a contrarian opportunity to buy selective stocks and index," he added.
The rupee depreciated by 18 paise to 66.20 against the US dollar at the Interbank Foreign Exchange as the dollar held strong at seven-month highs against other currencies as US economic data also backed up the case for December interest rate hike.
11 out of 12 sectoral indices closed in red with BSE IT index cracking over 2%.
Infosys shed nearly 4% following overnight losses of its ADR price on the NYSE which dropped 5%. The IT major is now looking at significantly improving its win rates of large deals, apart from increasing its employee utilisation rates, as part of its growth execution strategy in the medium term. Among others, TCS lost 1.6% and Wipro closed the session with marginal losses.
Dr Reddy’s Laboratories slipped nearly 2%. The pharma major said in a notice to BSE that it has closed Fondaparinux Intellectual property purchase and paid $17.5 million to Alchemia as deal consideration.
Metal shares lost sheen on the back of falling commodity prices across the globe. According to Reuters report, copper continued to suffer, hitting a 6-1/2-year low of $4,590 a tonne CMCU3, a decline of 27 percent year-to-date. Hindalco, Vedanta and Tata Steel dropped between 3-5%.
Coal India gained 1% after cabinet gave nod to 10% divestment in Coal India.
NTPC gained 0.7% after Moody’s reports suggest that the company will benefit from improving operating environment for India's power sector and revival scheme UDAY for debt-ridden distribution companies.
Tata Motors closed the session with marginal losses. The company is planning to launch new SUVs codenamed Eagle and X104 in 2016 and 2017, respectively.
Gail India climbed 1% after rating firm Goldman Sachs raised the stock to “neutral” from “sell”.
Aviation stocks finished mixed in today’s trade. The Competition Commission of India (CCI) imposed a penalty of Rs.152 crore on Jet Airways, Rs.64 crore on IndiGo and Rs 42 crore on SpiceJet for cartelization. However, these companies have decided to pursue legal steps against the CCI order. Jet Airways lost 3% while, SpiceJet and InterGlobe Aviation gained between 1-10%.
Asian markets closed lower amid weak commodity prices. Japan's Nikkei ended up 0.1% while Straits Times was down 1%. Chinese shares failed to sustain gains despite encouraging data which showed that Chinese home prices firmed up for first time in over a year in October 2015. The benchmark Shanghai Composite ended down 1% while Hang Seng eased 0.3%.
European shares retreated after sharp gains in the previous session and were trading lower as investors turned cautious amid fresh developments in Paris. The CAC-40, DAX and FTSE were down 0.5-1.1% each.