How should I cite or reference books when I'm trying to compile a book (from other sources) for a specific course at my college? So, I'm trying to compile a text for my fluid mechanics course, since my course does not follow one text, its difficult for reference. Most of the content will be taken word to word from established texts. So I want to know how to cite or reference those. If I do it for every section or paragraph, or just at the end as sort of a bibliography. Note that I might take content for a certain topic from different texts too. 
Is there a certain set of rules to follow?
This isn't exactly an answer, but should help you find the answer. In the US, we have the concept of Fair Use of copyrighted works. It contains the idea that some educational uses are valid in spite of copyrights but there are limitations. India doesn't subscribe to that doctrine, but has, instead the concept of Fair Dealing which seems to be more precise in what it allows and it differs from country to country. 

I point to both of these ideas, since some of what you wish to use might be covered by US law, but I'm not a lawyer and can't say. But both doctrines (I believe) are a matter of civil law, which implies potential lawsuits, not criminal law. But beyond legal doctrine, there is also the issue of your professional reputation. 

Unless your college is very small they probably have an office that has access to lawyers skilled in intellectual property law. You should try to contact that office and ask them about the requirements and what are your proper actions. 

It may be that you need to seek permission from at least some of the publishers holding copyrights. If that is the case, then they will tell you how the work you copy should be cited. It will probably include a copyright notice as well as the citation. For those you can use under Fair Dealing, it would be advisable to note the copyrights. 

I assume that some copyright holders will give you permission for things you can't do freely but will charge something per copy. This can be passed to students or absorbed by the college, I assume. 

I'll note that your proposal has the effect of reducing the demand for the works you copy. That is a major consideration under Fair Use, and may or may not be under Fair Dealing. And selling a composed book to students might be another consideration in the law, rather than making it available without cost. 

There is, however, another possibility that may fit your need or not. Some large publishers will publish several books on a general subject and some of them are willing to create a custom textbook containing chapters from several different books. These can be sold to students, though I doubt they are cheap.