Earlier in the day, both the Nifty and Sensex surged over 1 per cent each amid expectation that the BJP would form the government on its own after initial counting showed the saffron party securing clear lead over the ruling Congress. The broader 50-stock Nifty closed 4.75 points lower at 10,801.85.
The 30 share barometer was trading lower by 245.23 points (-0.69 percent) at 35298.71.
The BSE Sensex fell 238.76 points to close at 35,149.12 while the NSE Nifty dropped 58.40 points to 10,682.70.
The Sensex touched a high of 35,534.57 points and a low of 35,241.63 points in the trade so far.
The market breadth was weaker on BSE, as 1,024 shares advanced against 1,597 declined and 136 were unchanged. Globally, most Asian markets fell after North Korea unexpectedly cancelled high-level talks with Seoul and threatened to call off the much anticipated summit with the United States, reigniting tensions on the peninsula.
The biggest declines on the BSE happened during the onslaught of the 2008 Global Financial Crisis and when the Chinese central bank had suddenly moved to devalue the yuan.
On the currency front, the Indian rupee strengthened by 72 paise against the USA dollar to 67.80, from its previous close at 68.08 per greenback. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 518.47 crore, while domestic institutional investors (DIIs) bought shares worth Rs 531.33 crore yesterday, as per provisional data.
Sector-wise, the S&P BSE FMCG index rose by 184.11 points, the realty index edged higher by 45.42 points and the IT index ended 23.88 points higher.
Shares that lost the most include Hero MotoCorp, ICICI Bank, SBI, Adani Ports, RIL, ONGC, Axis Bank, Bajaj Auto, M&M, Coal India, IndusInd Bank, NTPC and Bharti Airtel, falling by up to 3.27 per cent.