The BSE Sensex slipped over 47 points to 35,598.06 in early trade on Thursday, following intense selling pressure in consumer durables, metal and realty stocks amid sustained capital outflows by foreign funds.
A deprecating rupee against the dollar also dampened the sentiment.
Asian markets were trading lower as investors look for direction amid growing global trade war tensions.
Wall Street closed for a public holiday.
US President Donald Trump's new tariffs on Chinese imports deadline also affected investors' sentiment world over, brokers said.
The 30-share index dropped 47.34 points or 0.13 per cent to 35,598.06. The gauge had gained 380.99 points in the previous two sessions.
Similarly, the NSE Nifty fell 13.55 points, or 0.12 per cent to 10,756.35.
Sectoral indices led by consumer durables, metal, realty, teck, capital goods, healthcare and IT were trading in the negative zone, falling up to 1.29 per cent.
Major losers were Tata Motors, Vedanta, Tata Steel, Bharti Airtel, Infosys, HDFC Ltd, Wipro, Asian Paints, Sun Pharma, L&T, Poweer Grid, HDFC Bank, Adani Ports, NTPC and SBI, falling up to 3.37 per cent.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth Rs 284.58 crore on Wednesday, while domestic institutional investors (DIIs) bought shares worth Rs 611.01 crore as per provisional data.
In the Asian region, Japan's Nikkei fell 0.36 per cent and Hong Kong's Hang Seng shed 0.66 per cent in early trade. China's Shanghai Composite index too was down 0.53 per cent.