All sectoral indices ended in the red barring Pharma and Realty that were above flatline. FMCG index was the biggest loser, falling more than 1 percent.
Benchmark indices extended losses for third consecutive session on Thursday, with the Sensex falling more than 200 points after Brent crude oil futures crossed USD 80 a barrel that will hit the central government's fiscal balance.
"Macro situation is currently getting a little shaky on the back of crude oil prices," Dipen Sheth of HDFC Securities told CNBC-TV18.
The 30-share BSE Sensex was down 238.76 points at 35,149.12 while the 50-share NSE Nifty closed below the 10,700 levels, down 58.40 points at 10,682.70.
"Sentiment has turned negative after the Karnataka poll but we believe the focus would return to earnings soon. However, trading in such a volatile scenario requires planning and disciple to execute that plan," Jayant Manglik, President, Religare Broking said.
Mostly traders are facing heat due to excessive choppiness on broader front. He advises focusing on index majors and keeping leveraged positions hedged.
The Nifty Midcap index outperformed frontliners, rising 0.4 percent on positive market breadth. About 906 shares advanced against 809 declining shares on the NSE.
On the global front, most Asian stocks closed lower as the yield on the US 10-year Treasury stayed above 3 percent. Investors also monitor the second round of US-China trade talks. China's Shanghai Composite, Hong Kong's Hang Seng and South Korea's Kospi ended down half a percent each.
European markets were mildly higher as investors continued to monitor corporate earnings and political risk.
Brent crude oil futures hit USD 80 a barrel intraday for the first time since November 2014 as supply may tighten further if Iranian exports fall. It rallied 20 percent in 2018 so far. The rising crude oil price is always negative for country like India that imports more than 80 percent of oil requirement.
Back home, all sectoral indices ended in the red barring Pharma and Realty that were above flatline. FMCG index was the biggest loser, falling more than 1 percent.
Bajaj Finance rallied more than 7.6 percent after March quarter profit shot up 61 percent YoY with improvement in asset quality. Group company Bajaj Finserv also gained 4.7 percent ahead of earnings later in the day.
Tata Steel declined 1.8 percent on profit booking after March quarter earnings came in higher than analyst expectations.
Index heavyweights HDFC (down 2 percent), ITC (down 2.4 percent), Reliance Industries (down 1.13 percent) and Infosys (0.6 percent) pushed the market lower.
Axis Bank, Adani Ports, Yes Bank, Hindalco Industries and Bharti Airtel were down up to 2 percent while Tata Motors, Bharti Infratel, Sun Pharma, ONGC, Wipro and Coal India gained 1-3 percent.
Reliance Communications share price shot up 57 percent after sources told CNBC-TV18 that the company and Ericsson informed National Company Law Tribunal that they are in settlement talks and requested NCLT to keep insolvency order in abeyance.Manali Petrochemical and Jyothy Labs were up 20 percent each on quarterly earnings while farm equipment maker Escorts ended down 0.7 percent on profit booking after it reported stellar earnings growth for the March quarter as it has been firing on all cylinders.