The 30-share Sensex on the Bombay Stock Exchange closed today at 14,296.79, a fall of 185.43 points, or 1.28 per cent, from its last close.
National Stock Exchange index Nifty also end down by a 45.40 points, or 1.05 per cent, at 4,292.10.
The markets which opened on a strong note came under pressure in the last one hour of the trade with investors resorting to selling after sensing weakness in European markets on continued worries about the US credit.
Global stocks hovered around two-year lows with losses in Europe and Japan.
The negative impact on trade is also because investors were rolling over their holdings to the next series ahead of the settlement in August.