The BSE Sensex and the NSE Nifty fell for a second session in a row to notch their lowest close since January 18, as Reliance Industries dropped after cutting estimates for domestic gas reserves, while banks extended a recent rout.
The 30-share Bombay Stock Exchange (BSE) Sensex fell 66.60 points, or 0.40 per cent, to 16,479.58.
The benchmark index has now lost 4.8 per cent in May, worse than the 4.2 per cent fall in the MSCI Asia-Pacific index excluding Japan.
The 50-share National Stock Exchange (NSE) Nifty lost 25.15 points, or 0.50 per cent, to 4,974.80.
The month of May is proving toxic for Indian shares. Globally, the deepening worries over the euro zone are weighing on risk assets, with the post-Greek election uncertainty hitting Asian shares on Wednesday.
That worsening global risk environment is combining with the concerns over taxation of foreign investors in India and doubts about the country's economic and fiscal outlooks.
Among decliners on Wednesday, Reliance Industries notched its sixth consecutive losing session, falling 1.9 per cent to end at its lowest close since January 2.
The shares of the energy conglomerate were hit after it cut estimates for proven gas reserves in its Indian blocks, in the latest negative news impacting Reliance.
Banks, one of the outperforming sectors in the January-March quarter, continued a miserable month, with the NSE banking index now down 8.5 per cent in May.
State Bank of India fell 3.7 per cent on Wednesday, while ICICI Bank fell 1 per cent.
Mahindra & Mahindra lost 3.2 per cent on news that fire broke out in one of the storage areas for a plant that manufactures its Scorpio and Xylo TCF vehicles in North Maharashtra.
Shares of Punjab National Bank fell 2.1 per cent to its lowest level since early January after reporting a rise in non-performing assets in its Jan-March earnings.
However, among gainers, ITC shares added 5.73 per cent, reversing a slump over the previous seven sessions, as analysts say the changes to the pricing methodology for a proposed excise duty would be positive for cigarette manufacturers.
Software services exporter Tata Consultancy Services rose 2.1 per cent and Wipro gained 0.6 per cent on bargain-hunting after steep falls in the prior session.
Generic drugmaker, Ranbaxy Laboratories added 4.2 per cent after its Jan-March net profit rose four-fold, boosted by forex gains and Lipitor sales.
With inputs from agencies