The 30-share barometer fell by 75.94 points, or 0.37 percent, to 20,226.19 with banking, realty and consumer durables leading the fall. The index had gained over 451 points in the past five sessions.
The wide-based National Stock Exchange index, Nifty shed 38.20 points, or 0.63 percent to, 6,039.60.
Brokers said fresh round of selling by participants after the RBI on Tuesday night announced additional liquidity tightening measures to check rupee slide mainly dampened the trading sentiment.
RBI has reduced the liquidity adjustment facility (LAF) for each bank from 1 percent of the total deposits to 0.5 percent, thus limiting the access to borrowed funds from the Central bank. The limit will come into force with immediate effect and continue till further notice, the RBI added.
In another measure to suck out liquidity from the system, RBI has asked banks to maintain higher average CRR (cash reserve ratio) of 99 percent of the requirement on daily basis as against earlier 70 percent. CRR is portion of deposits that banks are required to keep with RBI.
They said a weakening trend in the Asian region also had negative impact on the domestic equity market.
The BSE banking index suffered the most by falling 3.16 percent to 12,424.40 points as stocks of SBI fell by 2.10 percent to Rs 1,822, ICICI Bank by 2.97 percent to Rs 960.40, HDFC Bank by 2.57 percent to Rs 665.20 and Yes Bank by 4.44 percent to Rs 419.25.
In the Asian region, Hong Kong's Hang Seng index traded lower by 0.35 percent, while Japan's Nikkei Index shed 0.58 percent, in early trade. The US Dow Jones Industrial Average, however ended 0.14 percent higher in Tuesday's trade.


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