Powell said the first US rate cut in over a decade was "not the beginning of a long series of rate cuts".

The broader NSE index closed down 1.24% at 10,980, while the benchmark BSE index ended 1.23% lower at 37,018.32. Both indexes reported their worst percentage fall since early July.

The Nifty volatility index was up 7.12% at the closing bell.

Among sectors, the Nifty metals index was down 3.13% at close after copper prices fell to a 3-week low following Powell's comments.

The Nifty public-sector banks index closed 2.66% lower, as sector heavyweight State Bank of India, the country's largest lender, ended down 4.5%.

Tower operator Bharti Infratel led the gainers among the blue chip stocks, closing up 2.1%.