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At 2:39 pm, the Sensex traded at 37,833.04, down 238.09 points - or 0.63 per cent - from its previous close, while the Nifty was down 75.90 points - or 0.68 per cent - at 11,126.95.
Bharat Petroleum, IndusInd Bank, Indian Oil, Power Grid and Axis Bank - down between 2.86 per cent and 7.57 per cent - were the worst among the 36 stocks in the 50-scrip Nifty basket that moved lower at the time.
On the other hand, Dr Reddy's Laboratories, Wipro, Maruti Suzuki, Sun Pharma and Infosys - trading between 1.09 per cent and 4.79 per cent higher - were the top Nifty gainers.
HDFC, ICICI Bank and HDFC Bank were the top drags on the Sensex, accounting for a loss of more than 150 points in the index.
Market breadth turned negative from neutral, as 998 stocks on the BSE traded higher against 1,594 that succumbed to losses.
In India, COVID-19 cases rose by over 50,000 in the last 24 hours, and touched 1.58 million by Thursday morning, government data showed, with the country easing restrictions such as the night-time curfew and allowing gyms to open from next month.
Equities elsewhere in Asia gave up early gains, with MSCI's broadest index of Asia Pacific shares outside Japan last seen trading 0.11 per cent lower. Japan's Nikkei 225 benchmark fell 0.26 per cent.
On Wednesday, the US central bank left interest rates near zero to support its coronavirus-hit economy, raising hopes for accommodative monetary policies from other central banks.
All members of the Federal Reserve voted to leave the target range for short-term rates between 0 per cent and 0.25 per cent, and the US central bank vowed to use its "full range of tools" to support the world's largest economy.
shares started Thursday's session with sharp losses, with the United Kingdom's FTSE benchmark index last seen trading 1.53 per cent lower in early trade. France's CAC and Germany's DAX indices were down 1.03 per cent and 2.29 per cent respectively at the time.