The benchmark Sensex fell by 98 points in opening trade on Thursday on selling by foreign funds triggered by weak Asian equity markets.
The Bombay Stock Exchange barometer, which had lost 28.93 points in choppy trade on Wednesday, moved down by another 98.15 points, or nearly one per cent, to 9,520.39 points.
However, expectations of further decline in inflation, due around noon, capped losses to some extent.
The 50-share National Stock Exchange's index, Nifty, fell by 24.90 points to 2,900.80 points.
Marketmen said selling emerged in line with losses in other Asian stock markets on disappointment over the US government's latest bank bailout plan.
Reliance Industries fell by 0.70 per cent at Rs 1,374.40, Infosys Technologies lost 1.36 per cent at Rs 1,284.90 and State Bank of India shed 0.50 per cent at Rs 1,153.
ICICI Bank moved down by 1.33 per cent at Rs 429.60, Larsen and Toubro by 0.50 per cent at Rs 685.70, Maruti Suzuki by 1.58 per cent at Rs 622.55 and Sterlite Industries by 0.84 per cent at Rs 271.75.
Meanwhile, Hong Kong's Hang Seng index fell by 2.13 per cent, while Japan's Nikkei was down 2.91 per cent in early trade.