The Indian equity benchmarks dropped on Thursday dragged by losses in information technology shares ahead of monthly expiry of January futures and option contracts. The Sensex fell as much as 637 points and Nifty 50 index dropped below its important psychological level of 21,300 dragged by losses in HDFC Bank, Axis Bank, ICICI Bank, ITC, Infosys and Tata Consultancy Services.

As of 9:42 am, the Sensex was down 547 points at 70,513 and Nifty 50 index declined 142 points to 21,312.

Eleven of 19 sector gauges compiled by the BSE were trading lower led by the S&P BSE IT index's over 1 per cent fall. FMCG, banking, consumer discretionary, financial services, healthcare and telecommunications shares were also facing selling pressure.

On the other hand, power, oil & gas, real estate, capital goods, utilities and metal shares were witnessing buying interest.

Mid- and small-cap shares were trading on a mixed note as Nifty Midcap 100 index declined 0.2 per cent while Nifty Smallcap 100 index rose 0.4 per cent.

Tech Mahindra was top Nifty loser, the stock fell 5 per cent to Rs 1,336 after its earnings failed to meet estimates in December quarter. Axis Bank, SBI Life, Sun Pharma, HCL Technologies, ITC, Cipla, HDFC Bank, Divi's Labs and Adani Enterprises also fell between 1-2 per cent.

On the flipside, Bajaj Auto rose 2.6 per cent to hit record high of Rs 7,499.00 after its earnings surpassed estimates in December quarter. NTPC, Coal India, Bharat Petroleum, IndusInd Bank, Britannia, Hindustan Unilever and Adani Ports were also among the gainers.

The overall market breadth was positive as 2,101 shares were advancing while 1,424 were declining on the BSE.