The NSE Nifty 50 index closed down 1.34% at 11,729.6 and the S&P BSE Sensex ended 1.48% lower at 39,922.46. Both the indexes had gained as much as 0.3% during the session.
Fears of strict lockdown measures dragged global shares as coronavirus cases surged in the United States and Europe. The MSCI world equity index, which tracks shares in 49 countries, fell 0.6%.
Uncertainty about the U.S. presidential election also added to investor caution.
"The volatility in global markets will stay till the U.S. elections conclude," said Neeraj Dewan, director at Quantum Securities. "Indian markets are purely responding to what is happening globally".
All Nifty sub-indexes closed in the red, led by banks and financial stocks falling 2.17% and 2.31%, respectively.
ICICI Bank fell 3.1%, IndusInd Bank dropped 3.2% and large mortgage lender HDFC Ltd shed 3.5%.
Drugmaker Dr Reddy's Labs slipped 3.22% after the company posted a fall in profit for the September quarter.
Tata Motors, India's biggest carmaker by revenue, ended 0.7% lower after rising as much as 5.6% earlier in the session, following a narrower-than-expected September quarter loss on Tuesday.
Meanwhile, Bharti Airtel, which rose as much as 12.6% on a smaller September-quarter loss, held on to its gains and finished 4.27% higher.
Mobile services provider Route Mobile jumped 10% after the company's quarterly profit rose two-fold in its first earnings report since listing.
Axis Bank, Hero Motocorp and Larsen and Toubro were scheduled to report their quarterly results later in the day.
(Reporting by Derek Francis in Bengaluru; Editing by Ramakrishnan M.)
By Derek Francis