Selling by foreign institutional investors for the second day in a row yesterday also kept pressure on the market. (Agencies)
IT stocks Infosys and TCS, along with heavyweight Reliance Industries, dragged the Sensex lower. Tata Steel, Sesa Sterlite and Hindalco were among the top losers.
Eight of the 12 BSE sectoral indices declined, led by metal and realty stocks.The S&P BSE Sensex opened on a strong note and then fell to the day's low of 20637.18. It traded in a narrow range in the negative zone.
Later, it recovered on a firm opening in European stocks, only to fall back sharply in the last half hour. The index ended with a loss of 94.06 points, or 0.45 percent, at 20,693.24.
This was the lowest level since December 17, when it closed at 20,612.14. In five straight sessions, the Sensex has declined 477.44 points.
"Weakness in global markets and profit booking at higher levels led to selling pressure," said Rakesh Goyal, Senior Vice President at Bonanza Portfolio Ltd. "Global cues and third quarterly results will dictate further market direction."
The 50-share CNX Nifty on the National Stock Exchange declined 29.20 points, or 0.47 percent, to a three-week low of 6,162.25.
FIIs pulled out Rs 318.91 crore yesterday, according to provisional data with the stock exchanges. They sold shares worth Rs 13.90 crore last Friday, as per Sebi data.
There were concerns that US interest rates would rise after the smart recovery in the economy. According to some analysts, while most emerging markets, including India, are prepared for the tapering of the US stimulus programme, they are not equipped for interest rates rising.
Selling by foreign institutional investors for the second day in a row yesterday also kept pressure on the market.