Tariff-related uncertainties amid mixed global market trends also added to the pressure, analysts said.
The 30-share BSE Sensex tanked 689.81 points or 0.83 per cent to settle at 82,500.47. During the day, it fell 748.03 points or 0.89 per cent to 82,442.25.
Similarly, the 50-share NSE Nifty dropped 205.40 points or 0.81 per cent to 25,149.85.
From the Sensex firms, Tata Consultancy Services declined 3.46 per cent after reporting its June quarter earnings.
The country's largest IT services company on Thursday reported a 6 per cent growth in June quarter net profit at Rs 12,760 crore, helped by a jump in non-core income even as revenues grew at a tepid pace.
The rupee revenue grew 1.3 per cent to Rs 63,437 crore during the quarter. Still, it was down by over 3 per cent on a constant currency basis, as the company faced headwinds in its major markets amid a winding down of the BSNL deal, which helped it in recent quarters.
Mahindra & Mahindra, Bharti Airtel, Tata Motors, Titan, HCL Tech, Bajaj Finance, Reliance Industries, Trent, Infosys and HDFC Bank were among the other major laggards from the pack.
Shares of Hindustan Unilever Ltd (HUL) surged 4.61 per cent following the announcement that Priya Nair will become the first woman CEO and MD of the firm, effective August 1, 2025.
Axis Bank, NTPC, Eternal and State Bank of India were also among the gainers.
"The domestic market experienced a negative close due to a sober start to Q1 earnings season and a ramp-up in the tariff threat by the US to impose a 35 per cent tariff on Canada. Investors may continue to be focused on quarterly earnings for a buy-on-dips strategy. However, in the near term, the current premium valuation and the global headwinds like low spending and tariff uncertainties may restrain new inflows.
"The IT index underperformed due to deferment in orders and new investments, which may impact FY26 earnings estimates," Vinod Nair, Head of Research, Geojit Investments Limited, said.
In Asian markets, South Korea's Kospi, Japan's Nikkei 225 index settled lower, while Shanghai's SSE Composite index and Hong Kong's Hang Seng ended higher.
European markets were trading lower.
The US markets ended in positive territory on Thursday.
Global oil benchmark Brent crude climbed 0.31 per cent to USD 68.85 a barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 221.06 crore on Thursday, according to exchange data.
On Thursday, the Sensex dropped 345.80 points or 0.41 per cent to settle at 83,190.28. On similar lines, the Nifty declined 120.85 points or 0.47 per cent to 25,355.25.
