Despite central banks' intervention, the Indian currency witnessed a record intra-day low of 55.47, pushing investors into corner.
Earlier in the day, market had opened on a strong note with firm buying in banking, capital goods and metal counters following buoyancy in global markets. The rupee rebound from record lows on the back of RBI measures also helped the overall sentiment.
Asian markets witnessed an extended rally following firm closing in US stocks and propped up by G-8 assurance amid expectations of strong policy measures to tackle eurozone crisis in tomorrow's informal EU summit. The firm Asian markets had boosted the market sentiment here that was reflected in the high opening levels.
The key-index maintained its bullish momentum on sustained buying in frontline counters and touched highest points of the day.
However, a sudden bout of selling pressure amid rupee volatility in late afternoon trade forced the market to surrender entire gains and operators squared off their long positions.
Banking, fmcg, metal, oil&gas, infra, capital goods, pharma and auto witnessed selling pressure.
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The 50-share index swung widely between a high of 4,956.35 and low of 4,849.90 before ending at 4,860.50, a fall of 45.55 points, or 0.93 per cent, over its last close.
Sesa Goa, Tata Power, Maruti, Sterlite Industries, Sun Pharma, SBIN, JP Associates, Hindalco, Reliance Infra and L&T were the top percentage-wise losers from the Nifty pack.
TCS, HCL-Tech, Tata Motors, Cairn, SAIL, BHEL, BPCL, Infosys, Ranbaxy and Axis Bank ended with gains.
Turnover in cash segment rose to Rs 9,031.31 crore from Rs 7,812.70 crore yesterday. In all, 5,400.08 lakh shares changed hands in 48,97,311 trades. Market capitalisation stood at Rs 56,21,154 crore.