The Bombay Stock Exchange benchmark Sensex fell by 423 points at 10.30 am as investors squared off positions at the last day of derivatives contract amid the US Federal Reserve's announcement on Wednesday to cut rates by 50 basis points.
Bears tightened their grip on the market despite another rate cut by the Fed that raised hopes of increased capital inflows into equity. The Federal had slashed key rates by 75 basis points in a surprise move on January 22.
Weakness in the market was also attributed to winding up of arbitrary positions by Foreign Institutional Investors (FIIs), which have been continuously covering shorts in the Futures & Options, while pulling out from equity for the past few days.
The 30-share BSE barometer was quoted at 17,417.63 points, down 423.01 points from previous close of 17,758.64.
The broad-based Nifty of the National Stock Exchange, too fell by 84.60 points to 5,083.00 at 10.30 am from last close of 5,167.60.
Asian markets were narrowly mixed during morning trading.