After gyrating over 463 points during the day, the 30-share BSE index settled 188.26 points, or 0.46 per cent, down at 40,966.86.
Likewise, the broader NSE Nifty closed 63.20 points, or 0.52 per cent, down at 12,055.80.
In the Sensex pack, Bharti Airtel was the biggest loser, dropping 4.55 per cent, followed by Tata Steel, Reliance Industries, Maruti, ITC, Nestle India and ICICI Bank.
On the other hand, HDFC, Bajaj Finance, Sun Pharma and HDFC Bank advanced up to 1.53 per cent.
Intense volatility remained amid a global selloff led by concerns over the impact China's coronavirus on world economies, analysts said.
Market participants are also jittery ahead of January derivatives expiry this week, they added.
South Korea's Kospi plunged over 3 per cent and Japan's Nikkei dropped 0.55 per cent. Stock exchanges in Europe too opened on a tepid note.
Brent crude oil futures dropped 0.77 per cent to USD 58.13 per barrel.
On the currency front, the Indian rupee appreciated by 12 paise to 71.31 per US dollar (intra-day). ANS MKJ