Muted earning numbers, forecast of a below-normal monsoon and fading hopes of a rate cut by the Reserve Bank weighed on sentiments, brokers said.
Moreover, depreciating rupee against the dollar also led to a cautious approach, they added.
Clarificatory amendments to MAT rules are under consideration of the government," Minister of State for Finance, Jayant Sinha, told reporters on the sidelines of a conference on climate change held here today.
The 30-share Sensex resumed higher at 27,977.27 and shot up to regain the 28,000-mark in early trade on the back of firming global cues.
However, the index failed to hold onto initial gains due to intense selling pressure in the last 90 minutes and slumped to 27,621.18 before ending at 27,735.02, a fall of 155.11 points or 0.56 percent.
This is BSE Sensex's sixth fall in last seven sessions.
The gauge had gained 214.19 points in yesterday's trade after Finance Minister Arun Jaitley said GST bill will be passed in the current session of Parliament.
Also, the NSE Nifty ended 31.40 points or 0.37 percent down at 8,398.30 after hitting the day's high of 8,504.95 and a low of 8,361.85 during the session.
On the Sensex, Sun Pharma suffered the most by falling 2.55 percent to Rs 942.45.
Other losers included, SBI, Tata Motors, NTPC, M&M, ONGC, Dr Reddy's, L&T, Infosys, Wipro and RIL.
Of 30-share index, as many as 19 scrips ended lower.
However, Coal India, BHEL, Bajaj Auto, Bharti Airtel, Cipla, Hindalco, Sesa Sterlite, Tata Power and Tata Steel and TCS finished higher.
Sectorally, BSE capital goods suffered the most by falling 0.89 percent, followed by healthcare at 0.86 percent, realty 0.85 percent, auto 0.67 percent, power 0.65 percent, oil & gas 0.54 percent and IT 0.32 percent.
Foreign Portfolio Investors sold shares worth Rs 910.15 crore, while Domestic Institutional Investors bought shares worth Rs 217.98 crore, yesterday as per provisional data.
European stocks were trading lower today as a data showed euro-area output expanded at a slower pace in April.
Other Asian indices ended mixed following a report indicating Chinese manufacturing activity contracted in April.

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