Shares fell on Thursday as investors sold information technology firms on fears of a demand slowdown, while an increase in taxes on fuel exports and domestic crude hit the energy sector.
The NSE Nifty 50 index ended down 1.22% at 17,542.80 and the S&P BSE Sensex dropped 1.3% to 58,766.59. The indexes were also weighed down by April-June economic growth data that fell short of expectations.
The Nifty IT index dropped 2%.
"Global weakness is reflecting in Indian equity markets. IT is seeing selling due to concerns of growth in key markets like the United States and Europe," said Siddharth Khemka, head of retail research at Motilal Oswal Financial Services.
"There is a little bit of weakness because of marginally lower-than-expected GDP (gross domestic product). There are hardly any big positive triggers in the market."
While the pace of economic growth at 13.5% was the fastest in a year, economists warned higher interest rates could cool that momentum in the coming quarters.
The energy index fell 1.9% after the Indian government late on Wednesday raised taxes on aviation, diesel fuel exports and domestic crude oil.
Shares of Oil & Natural Gas Corp fell 2.81%, while Reliance Industries dropped 2.94%.
Zee Entertainment fell as much as 6% after a Reuters report said the Indian competition regulator found more scrutiny was needed over the company's prospective merger with the Indian unit of Japan's Sony.
Dish TV shares surged up to 20% after the broadcast satellite service provider said Chairman Jawahar Lal Goel would not seek reappointment, signalling a win for top shareholder Yes Bank in its push for a board overhaul.