The NSE Nifty, however, managed to rise for the sixth straight session.
Caution prevailed ahead of the key economic IIP data for February to be released after trading hours and beginning of the fourth quarter earning season next week, brokers said.
The BSE Sensex opened a shade higher at 28,889.27 and advanced to the day's high of 28,907.81 in early trade on sustained foreign capital inflows.
On emergence of profit-booking it slipped into the red and touched a low of 28,756.75. It finally settled lower by 5.83 points or 0.02 per cent at 28,879.38.
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The market was in an "over-bought" position following huge positions built up in the past few trading sessions even after the RBI kept key rates unchanged in its monetary policy and the rating agency Moody's upgrading the country's credit outlook to 'positive', brokers added.
Pharma stocks continued to fall for the second straight session with Cipla falling by most on the Sensex by 2.66 per cent, whereas Lupin shed 2.49 per cent.
Shares of Sesa Sterlite, SBI, Dr Reddy's, Bharti Airtel, Infosys, RIL, Tata Power and BHEL, however, witnessed buying activity and finished in the green.
Sector-wise, the BSE banking index suffered the most by losing 0.35 per cent, followed by capital goods index by 0.31 per cent and healthcare at 0.19 per cent.
However, Small-cap index gained 1.10 per cent and mid-cap index rose 0.39 per cent, indicating continued buying by retail investors.
Globally, a mixed closing in the Asian region and European markets extending an all-time high in their opening trade, influenced trading sentiments here.