Equity benchmark Sensex dropped over 200 points in early trade on Thursday, tracking losses in financial stocks ahead of Finance Minister Nirmala Sitharaman's press conference.
The 30-share BSE index was trading 226.79 points or 0.52 per cent lower at 43,366.88.
Similarly, the broader NSE Nifty slipped 60 points or 0.47 per cent to 12,689.15.
IndusInd Bank was the top loser in the Sensex pack, shedding around 3 per cent, followed by HDFC twins, Kotak Bank, SBI, Axis Bank and ICICI Bank.
On the other hand, M&M, Sun Pharma, Infosys, HUL and Nestle India were trading with gains.
In the previous session, Sensex settled 316.02 points or 0.73 per cent higher at 43,593.67, while Nifty vaulted 118.05 points or 0.93 per cent to close at a record 12,749.15.
The government on Wednesday approved a Production-Linked Incentive (PLI) scheme for ten key sectors, including telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly Rs 2 lakh crore over a five-year period.
Foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 6,207.19 crore on Wednesday, according to provisional exchange data.
Domestic trade set up does not look inspiring as of now as the market is expected to take a pause here, said Arjun Yash Mahajan Head Institutional Business at Reliance Securities.
"However, the possibility of announcement of additional fiscal stimulus by the government shortly may keep sentiment alive," he added.
Finance Minister Nirmala Sitharaman is scheduled to address the media later in the day.
On the global front, US equities ended mostly higher mainly supported by technology stocks as continued surge in new coronavirus cases and resultant restrictions in select cities in the US made investors flock to stocks which emerged as winners during lockdown, Mahajan said.
Elsewhere in Asia, bourses in Shanghai and Tokyo were trading higher in mid-session deals, while Hong Kong and Seoul were in the red.
Meanwhile, international oil benchmark Brent crude was trading 0.18 per cent higher at USD 43.88 per barrel.