After opening on a positive note, the 30-share index reversed all early gains to settle 413.89 points, or 1.20 per cent, lower at 33,956.69.
In a similar movement, the NSE Nifty declined 120.80 points, or 1.19 per cent, to 10,046.65.
ICICI Bank was the top laggard in the Sensex pack, falling around 3 per cent, followed by Bharti Airtel, HDFC Bank, Bajaj Finance, Kotak Bank and Axis Bank.
On the other hand, IndusInd Bank, Sun Pharma, M&M and HDFC were among the gainers.
According to analysts, domestic market succumbed to profit-booking at higher levels as concerns over rising number of COVID-19 cases in the country outweighed the optimism over reopening of the economy.
The number of infections in India spiked to 2,66,598, while the death toll rose to 7,466 and, according to the health ministry.
The number of cases around the world linked to the disease has crossed 71.19 lakh and the death toll has topped 4.06 lakh.
In contrast to the Indian equities market, Shanghai, Hong Kong and Seoul bourses ended with gains. Japan settled in the red.
Stock exchanges in Europe were trading with significant losses in early deals.
International oil benchmark Brent crude futures fell 1.69 per cent to USD 40.11 per barrel.
On the currency front, the rupee closed 6 paise lower at 75.61 against the US dollar. ANS MKJ