The benchmark index fell below the 10K mark during the afternoon trade as other global markets were mostly lower even as a US pledge to loan troubled automakers $17.4 billion failed to ease worries about a deteriorating world economy.
Indian markets traded in a narrow range amid choppy trade. On the BSE, auto and oil & gas stocks are dragging the markets.
Among the Sensex stocks, M&M and Maruti are leading the losers, down over 4 per cent. Heavyweight RIL is down over 2.5 per cent. The gainers are being led by Tata Motors and DLF, up over 3 per cent.
The emergency help announced on Friday for General Motors Corp. and Chrysler LLC came as a relief to many investors, staving off bankruptcies that would have only deepened the recession in the world's largest economy.
But concerns about the global outlook, as well as falling demand for the Asian-made products like cars and electronics that drive regional growth, continued to weigh on investors, analysts said. In Japan, figures showed a record 26.7 per cent plunge in exports last month compared to a year ago.
"The big question about what's going to happen with the big U.S. automakers has been settled for now," said D. Gorton, research analyst at Louis Capital Markets in Hong Kong. "But investors are still wondering what's going to happen with the U.S. and ... when the U.S. economy is going to recover."
Trading volumes across the region were light in the run-up to the year-end holidays. Hong Kong's Hang Seng Index dropped 3.3 per cent, and Australia's key index was down 1.6 per cent.
South Korea's Kospi dipped 0.1 per cent after opening higher and Singapore's benchmark was down 0.5 percent.
Tokyo bucked the regional trend, with its Nikkei 225 stock average rising 130.68 points, or 1.5 percent, to 8,719.20 despite the latest bad news about the country's exports.