Equity benchmarks declined on Thursday after a two-day rally, mirroring a weak trend in the US markets and fresh foreign fund outflows.

Weak US consumer data and hawkish comments from the Fed's policymakers dragged markets lower.

The 30-share BSE Sensex declined dropped 187.31 points or 0.31 per cent to settle at 60,858.43. During the day, it tumbled 329.19 points or 0.53 per cent to 60,716.55.

The broader NSE Nifty dipped 57.50 points or 0.32 per cent to end at 18,107.85.

From the Sensex pack, Asian Paints, Tata Motors, IndusInd Bank, Kotak Mahindra Bank, Hindustan Unilever, Titan, UltraTech Cement, Bajaj Finserv, ITC and Nestle were the biggest laggards.

Tata Steel, Power Grid, Tech Mahindra, Axis Bank, HDFC Bank and Larsen & Toubro were among the gainers.

Elsewhere in Asia, equity markets in Tokyo and Hong Kong settled lower, while Seoul and Shanghai ended in the green.

European benchmarks were trading in the red during mid-session deals. Markets in the US had ended lower on Wednesday.

"Domestic indices snapped their previous gains amid negative sentiments from their global counterparts. Weak US consumer data and hawkish comments from the Fed's policymakers on Wednesday hammered investor risk appetite. Lingering fears of recession dragged global bourses down, leaving the market volatile," said Vinod Nair, Head of Research at Geojit Financial Services.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 319.23 crore, according to exchange data.

International oil benchmark Brent crude declined 0.68 per cent to USD 84.40 per barrel.

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