The benchmark indices, the BSE Sensex and the NSE Nifty, dropped lower in morning trade on Thursday.
At 10:35 am, the Sensex was at 48,679, down 500 points or 1.02 per cent lower. The Nifty slipped to 14,416, down 132 points or 0.91 per cent.
On the Sensex, ONGC and L&T were the only stocks in the green. The major losers were Maruti, Bajaj Finance, Kotak Bank, UltraTech Cement and SBI.
According to an agency report, the Sensex was dragged by losses in index majors Reliance Industries, Infosys and HDFC Bank amid foreign fund outflow and a weak trend in global markets.
In the previous session, the Sensex ended 871.13 points or 1.74 per cent lower at 49,180.31, and the Nifty declined 265.35 points or 1.79 per cent to 14,549.40.
Foreign institutional investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 1,951.90 crore, as per exchange data.
"The uncertainty in the market continues with increasing risk arising from the second wave of COVID-19 attack in India in the context of a third wave in parts of Europe," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Volatility is here to stay for some time before stability emerges, he said, adding that a major trend in the market now is the comeback of pharma stocks in recent days and the weakness in banking stocks.
Elsewhere in Asia, bourses in Shanghai and Hong Kong were in the red in mid-session deals, while Tokyo and Seoul were trading on a positive note.
Top bourses on Wall Street ended with significant losses in overnight trade. (with inputs from PTI)