The BSE Sensex is down 0.3 percent while the 50-share Nifty is 0.42 percent lower. Shares extend losses after the DMK party pulled out of ruling UPA coalition on Tuesday, raising doubts about the fate of government's reforms.

Banking stocks extend losses on continued disappointment as investors were disappointed on Tuesday after the RBI left CRR unchanged and also raised doubts about future rate cuts.

Asian shares were trading lower after a bailout plan for Cyprus fell into disarray, but losses were limited on investors' hopes that a last minute deal was still within reach.

ICICI Bank Ltd(ICBK.NS) falls 0.7 percent and HDFC Bank Ltd (HDBK.NS) is down 0.76 percent.

Hindustan Unilever Ltd(HLL.NS) shares gain 1.1 percent after UBS upgraded it to "buy" from "neutral" citing expectations of a "strong" business outlook and the prospect of rising volumes for its products.