The BSE benchmark Sensex was down by 121 pts in early trade on Thursday, with no let-up in selling pressure on interest rate-sensitive stocks amid weak Asian cues.
The BSE 30-share Sensex was down 120.63 points, or 0.69 per cent, at 17,472.14 at 1015 hours, while the NSE's 50-share Nifty was also down by 14.60 points, or 0.28 per cent, at 5,238.95.
Interest rate-sensitive realty stocks extended their steep losses on concerns that higher interest and higher property prices may dent demand for residential units.
Realty major Unitech tumbled to a 52-week low as investors punished the firm for being named by the Central Bureau of Investigation (CBI) as one the beneficiaries of cheap spectrum allocation in 2008.
However, shares of Anil Dhirubhai Ambani Group (ADAG) firms rebounded after suffering steep losses on Wednesday.
Asian markets were trading lower as investors booked profits in light of the US Federal Reserve's warning that the recovery of the world's largest economy was still fragile and warned against sharp spending cuts.
The key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.09 per cent to 1.91 per cent, while China's Shanghai Composite rose by 0.78 per cent in early trade on Thursday.
US Federal Reserve Chairman Ben Bernanke had yesterday stated that US economic conditions were still too weak for the central bank to withdraw monetary stimulus measures.