Here are 10 things to know:
At 9:27 am, the Sensex traded 531.39 points - or 1.41 per cent - lower at 37,137.03, while the Nifty was down 165.60 points - or 1.49 per cent - at 10,966.25. A selloff across sectors pulled the markets lower.
Hindalco, Zee Entertainment, UPL, Bajaj Finance, Mahindra & Mahindra and Tata Motors, trading between 2.66 per cent and 3.81 per cent lower, were the worst hit among 48 laggards in the Nifty basket of 50 shares.
Reliance Industries, Infosys, TCS and ICICI Bank were the biggest drags on Sensex, together accounting for more than 200 points in the index's fall.
The National Stock Exchange's India VIX index - which measures the expectation of volatility in the near term - jumped as much as 7.55 per cent in early trade.
Overall market breadth was sharply negative, with an advance-decline ratio of 1:5, as only 285 stocks on the BSE rose against 1,422 that fell.
Concerns about a delayed recovery from the damage caused by the coronavirus pandemic shook investors, according to analysts.
Equities in other Asian markets fell following a slump on Wall Street overnight, with MSCI's broadest index of Asia Pacific shares outside Japan last seen trading 1.47 per cent lower. Japan's Nikkei 225 benchmark was down 0.57 per cent.
Federal Reserve Vice Chair Richard Clarida said on Wednesday that the US economy remains in a "deep hole" of joblessness and weak demand, and called for more fiscal stimulus, noting that policymakers "are not even going to begin thinking" about raising interest rates until inflation hits 2 per cent.
Cleveland Federal Reserve Bank President Loretta Mester echoed similar views, saying that the US remains in a "deep hole, regardless of the comeback we've seen".
On Wednesday, the Sensex had ended 65.66 points lower at 37,668.42 and the Nifty at 11,131.85, extending losses to a fifth straight session.