The 30-share barometer, which had lost 240.10 points in the previous session, fell by 335.33 points, or 1.58 per cent, to 20,798.23.
Stocks of banking, capital goods, metal, auto, power and consumer durable sectors declined due to profit-booking.
Similarly, the wide-based National Stock Exchange index Nifty fell by 80.80 points, or 1.29 per cent, to 6,185.95.
Brokers said a weak trend prevailed in the Asian region and markets remained under pressure as the US Federal Reserve is poised to continue tapering its stimulus programme. The market sentiment was also dampened by tighter credit conditions in China, raising fears of a slowdown, they added.
In the Asian region, Japan’s Nikkei Index was down 2.49 per cent, while Hong Kong’s Hang Seng index shed 2.28 per cent in early trade.
The US Dow Jones Industrial Average ended 1.96 per cent down in Friday’s trade.