The markets however gained some ground at the end of the first hour of trade. At 10:04 am, the Sensex traded 146.00 points - or 0.40 per cent - lower at 36,326.93 while the Nifty was down 32.35 points - or 0.30 per cent - at 10,709.00.

Top percentage laggards on the 50-scrip index at the time were IndusInd Bank, ICICI Bank, CIpla, Kotak Bank, ITC and Maruti Suzuki, struggling with losses of between 1.13 per cent and 2.30 per cent.

HDFC Bank, ICICI Bank, ITC, Kotak Mahindra Bank and HDFC were the top drags on the Sensex.

Market breadth favoured losses with 574 stocks trading higher and 1,157 moving lower on the BSE. On the National Stock Exchange (NSE), 537 stocks advanced while 1,092 declined.

Analysts say concerns on the economic growth front are spooking the markets on rising hopes of government intervention.

The Nifty Bank - comprising 12 banking stocks - slumped as much as 1.75 per cent, led by IndusInd Bank, ICICI Bank and Kotak Bank. Yes Bank, however, bucked the trend, jumping as much as 8.79 per cent in intraday trade in a rebound after four days of losses.

On the other hand, the Nifty IT index jumped 1.47 per cent at one point, as the rupee slid below the 72 mark against the dollar. Weakness in the rupee boosts the profitability for Indian IT companies which earn a majority of revenues from US and European markets.

The rupee depreciated by 22 paise against the US dollar to hit a nine-month low of 72.03.

Foreign investors continued their selling spree in the Indian equities amid fading hopes of any stimulus measures by the government to arrest slowdown. Foreign portfolio investors (FPIs) withdrew Rs 902.99 crore from the capital markets on a net basis on Thursday, provisional data from the NSE showed.