In early trade, the 30-share index broke below the crucial 26,000-mark by dropping nearly 250 points to hit a low of 25,972.54 as investors booked profits in recent gainers amid mixed Asian pointers.
Thanks to across-the-board buying during the mid-session trade, the Sensex reversed early losses to trade in the positive terrain and touched a high of 26,233.46, closing at 26,192.98, down 25.93 points, or 0.10 percent retreating from its nearly three-week highs.
The gauge had gained 512.98 points in the previous two sessions on rate cut hopes after the US Fed decided to hold rates steady. The 50-issue NSE Nifty fell 4.80 points, or 0.06 percent, to 7,977.10. It shuttled between 7,908.35 and 7,987.90 during the session.
Brokers said market commenced lower as participants locked in gains in blue-chips that made sizeable gains in the past two sessions amid a weak trend overseas following weekend losses at US markets after the Fed's decision to keep interest rates unchanged sparked worries about global growth.
They said reports that foreign funds which had been major sellers on the domestic bourses made fresh purchases in Friday's trade helped stocks recoup much of their lost ground. Meanwhile, foreign portfolio investors (FPIs) net bought shares worth Rs 643.51 crore last Friday, as per provisional data released by the stock exchanges.
Reliance Industries lost big, dropping 1.94 percent, followed by M&M, ITC, Bharti Airtel and Dr Reddy's. The largest carmaker Maruti Suzuki emerged as the top gainer by rising 2.64 percent after reports said the company expected to soon get a crucial clearance from the Gujarat government to allow its parent Suzuki Motor Corp to own the upcoming plant in the state.
Gains in Hindalco, Axis Bank, SBI, GAIL and Tata Motors cushioned the fall somewhat. Out of the 30-share Sensex, 17 turned lower.

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