Sentiment was also hit as metal stocks slumped, tracking falls in commodities after the World Bank cut its global growth forecasts for 2015 and 2016.
However, losses were limited as slower-than-expected inflation in December raised hopes for an early cut in interest rates to help the economy out of its longest phase of sub-par growth since the 1980s.
The benchmark BSE Sensex fell 0.29 per cent, while the broader Nifty lost 0.26 per cent.
ITC fell 3.4 per cent after the health ministry proposed on Tuesday to amend the anti-smoking law, which investors fear may lead to reduced volumes, especially if the sale of loose cigarettes is banned.
Sesa Sterlite slumped 8.1 per cent, while Hindalco Industries lost 6.3 per cent, after copper futures slumped to more than 5-1/2 year lows.
Copyright: Thomson Reuters 2015