The 30-share index fell by 171.04 points, or 0.94 per cent, to 17,961.20 points, a level last seen on May 25.
The broad-based National Stock Exchange index Nifty traded lost 57.70 points, or 1.05 per cent to trade at 5,389.80 points.
Marketmen said concerns of slowdown in economic growth after hike in key policy rates by the Reserve Bank of India weighed over sentiments.
The Reserve Bank of India hiked short-term lending rate (repo) by 25 basis point to 7.50 per cent, a tenth increase since March 2010, to check rising inflation.
Also, overseas investors sold a net Rs 3.73 billion of stocks on June 14, turning net sellers of the equities this year for the first time since June 1.
Market majors Reliance Industries and Infosys Technologies, with their 21 per cent weightage on the Sensex, suffered further losses.
RIL fell by 1.65 per cent while Infosys was down 1.07 per cent in the preclose trade.