Eleven of 15 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty IT index's 0.9 per cent decline.
The Indian equity benchmarks staged a gap down opening on Friday dragged by weakness in banking and information technology shares amid weak cues from global markets. The Sensex fell as much as 478 points and Nifty 50 index touched an intraday low of 18,120. Meanwhile, other Asian markets were also trading lower with Japan's Nikkei dropped 1.68 per cent, Hong Kong's Hang Seng declined 1 per cent and China's Shanghai Composite fell 0.6 per cent.
As of 9:27 am, the Sensex was down 328 points at 60,907 and Nifty 50 index fell 78 points to 18,180.
Overnight, nervous global stock markets tumbled on Thursday as the dollar wilted, after a drumbeat of hawkish remarks from Federal Reserve officials made clear that US interest rates could rise as soon as March, putting an end to ultra-easy monetary conditions.
Fed Governor Lael Brainard became the latest and most senior US central banker to signal that rates will rise in March to fight inflation, saying that the Fed "has projected several rate hikes over the course of the year".
After spending much of the day nursing modest declines, US stocks deepened losses toward the end of the session. The S&P 500 lost 1.4 per cent, the Nasdaq Composite dropped 2.5 per cent, and the Dow Jones Industrial Average lost 0.5 per cent, news agency Reuters reported.
Back home, small-cap shares were witnessing strong buying interest in an otherwise weak market, the Nifty Smallcap 100 index climbed 0.7 per cent.
Eleven of 15 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty IT index's 0.9 per cent decline. Nifty Bank, Financial Services, FMCG and Private Bank indices were also trading lower.
On the other hand, Auto, Metal, Media and Oil & Gas indices were trading higher.
Reliance Industries was among the top gainers in the Nifty 50 basket of shares, the stock rose 1 per cent to Rs 2,560 after the company informed exchanges that it has signed an agreement for investment of Rs 5.95 lakh crore in green energy and other projects in Gujarat.
Tata Consumer Products, Indian Oil, NTPC, Maruti Suzuki, Larsen & Toubro, UltraTech Cement, HDFC Bank, Power Grid and Bharat Petroleum also rose between 0.5-2.2 per cent.
On the flipside, HCL Technologies was top Nifty loser ahead of its December quarter earnings. Axis Bank, Asian Paints, HDFC, Wipro, ONGC, UPL, Nestle India, Hindustan Unilever, Grasim Industries and Tech Mahindra also fell between 0.5-2 per cent.
The overall market breadth was positive as 1,861 shares were advancing while 1,122 were declining on the BSE.