For the previous trading week ended May 8, FPIs sold stocks worth 6,553.44 crore or $1.02 billion in the equities market.

The day's fall was also attributed to the decline in the Indian rupee's vale which further weakened against the dollar. by around 17 paise against the US dollar to 64.17 per dollar around 4.30 p.m.

"Domestic factors such the outcome of the parliament session and the disappointing quarterly results have also dampened sentiments," Nevgi said.

Vinod Nair, head of fundamental research with Geojit BNP Paribas Financial Services said that: "Factors like increase in Europe bond yield, outperformance by other EMs and currency depreciation is impacting global inflow. Besides these, when the domestic earnings are downgrading and outcome from parliament session is shaky market is not taking it well."

"After posting strong gains in prior two trading days, key benchmark indices dropped today as caution prevailed ahead of release of macro-economic data," said brokerage Motilal Oswal.

"Delay in the passage of land acquisition and foods and services tax bill and intra-day depreciation in the rupee by nearly 41 paise to 64.26 against US Dollar also weighed on the sentiments," added another leading brokerage Sharekhan.

Another major trigger for the fall was the investor anxiety over the U.S. Federal Reserve's reaction to the better-than-expected growth in the non-farm jobs in the US.

Growth in jobs has the ability to push the Federal Reserve to increase interest rates, thereby attracting funds back into the US equities' market.