The 30-share barometer has seen an erosion of 1,326 points in last five sessions.
The 50-share NSE Nifty continued its slide for the sixth session and dipped below the psychological 8,100-mark by tumbling 70.55 points or 0.87 per cent to close at 8,044.15.
The sentiment was also hit after a better-than-expected US jobs data raised fears that the Federal Reserve will raise interest rates this year.
At the forex market, the rupee breached the 64-level to trade at 64.16 (intra-session) against the dollar.
The Sensex, after opening higher at 26,814.31, advanced to touch the day’s high of 26,827.05 on value-buying in recently beaten blue-chip stocks.
However, it slipped into the negative zone on emergence of profit-booking and touched a low of 26,472.87 before settling 245.40 points or 0.92 per cent down at 26,523.09, a level last seen on October 20, 2014.
Selling pressure was also visible in the broader indices.
The BSE mid-cap and small-cap indices were down 1.54 per cent and 1.42 per cent, respectively.
Caution ahead of a host of macroeconomic numbers such as IIP and inflation data, to be released this week also cast shadow on the trading sentiments, traders said.
As many as 25 Sensex stocks closed in the red.
Sectorally, the BSE consumer durables index suffered the most by falling 1.94 per cent, followed by metal (1.73 pc), oil&Gas (1.55 pc), FMCG (1.52 pc) and healthcare (1.17 pc).
Meanwhile, mixed trend was seen in other Asian markets and a weak opening was witnessed in European markets.
PTI