Infosys crashed by 8.54 per cent after the company said it expected muted growth in January-March quarter and even probably in the next financial year.
After resuming lower, the Sensex recovered but traded in a narrow range on mixed Asian trends and better European opening.
Towards the fag-end, IT stocks, particularly Infosys, came under severe selling pressure, pulling down the bellwether index to 21,774.61, a fall of 81.61 points from its previous close.
The 50-share index Nifty of NSE also dropped 23.80 points to end at 6,493.10.
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"Buoyed by better than expected macro-economic data, equity benchmarks were seen making a positive start. However, gains remained capped as some cautiousness crept in the market as SEBI has tightened norms to prevent money laundering through capital markets," said Jayant Manglik, President, Retail Distribution, Religare Securities.
According to official data released after market hours yesterday, retail inflation eased to 25-month low of 8.1 per cent in February and industrial growth registered a modest growth of 0.1 per cent in January.
SSLT at 1.54 per cent, Axis Bank 1.13 per cent, TCS 1.18 per cent, Maruti Suzuki 1.01 per cent and Tata Steel 0.82 per cent were major losers.