The benchmark indices settled over 0.5 per cent lower on Thursday on expiry of September series Futures and Options (F&O) contracts.
The S&P BSE Sensex ended at 36,324, down 218 points, while the broader Nifty50 index settled at 10,978, down 76 points.
Among sectoral indices, the Nifty Bank index settled 1.3 per cent lower due to a fall in the shares of YES Bank, which cracked 9 per cent to end at Rs 203.60.
Shares of select consumer durable companies, too, fell on Thursday, after the government raised import duties on 19 non- essential items, including refrigerators, air conditioners, and jet fuel. Voltas fell over 6 per cent to Rs 536 on the BSE. Havells India settled at Rs 612, over 5 per cent down. Aviation stocks also slipped as the government imposed an import tariff on aviation turbine fuel (ATF).
US Federal Reserve hikes rates
The US Federal Reserve raised short-term interest rates by a quarter percentage point or 0.25 per cent in its latest policy meeting, that concluded Wednesday. It was the third rate hike by the US Fed this year and the eighth such move since December 2015.
Global shares struggled in volatile trade on Thursday with Asian markets giving up earlier gains after the Federal Reserve raised interest rates and affirmed plans for more policy tightening through to 2020.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 per cent, reversing from a 0.3 per cent gain earlier in the session. There were, however, pockets of resilience such as South Korea's Kospi, which hit three-month highs, as it resumed trade after a three-day public holiday.
Japan's Nikkei briefly touched an eight-month high as automakers rose after the United States indicated it would not impose further tariffs on Japanese automotive products for now, though it ended down 1 per cent.
(with Reuters inputs)