The benchmark Sensex closed 208.43 points lower at 41,115.38, while the Nifty settled at 12,106.90, lower by 62.95 points.
Except for IT, media and FMCG stocks, all other sector indices closed in the red. Heavy selling was seen in private banks and auto stocks.
Vinod Nair of Geojit Financial Services said: "Banks, auto and midcaps are consolidating due to marginal slippage in NPAs (non-performing assets or bad loans) and earnings growth than anticipated earlier. The Q3 result had solid expectations, but actual results are marginally below expectations for sectors like IT and banks; this is impacting the market."
The energy sector was a key laggard on Wednesday. ONGC and NTPC were the top losers on the BSE.
Top gainers on the BSE were Nestle India, followed by TCS, Infosys, HCL Tech and SBI.
"A lot will depend on the actual outcome of the Budget for further direction; the market is turning cautious before the big event," Nair added.
Asian Paints closed 1.76 per cent lower at 1,778.30 after reporting a 20 per cent year-on-year rise in its consolidated net profit at Rs 764.43 crore for the quarter ended December 31, 2019.
Santosh Meena, Senior Analyst, TradingBells, said that Asian paints posted a good set of numbers amid a slowdown in the economy. Valuations are on the expensive side but the growth prospect is still bright.
( With inputs from IANS )