Snapping a three-session winning run, equity benchmarks ended modestly lower today as investors retreated to the sidelines amid firm oil prices and a weakening rupee.
Market sentiment was cautious ahead of assembly elections in Karnataka on Saturday, while unabated foreign fund outflows and lacklustre earnings by some companies added to the gloom, brokers said.
The BSE Sensex dropped 73.08 points to 35,246.27, while the NSE Nifty ended the day at 10,716.55, down 25.15 points.
Oil prices continued their move higher as investors digested the news of renewed US sanctions on Iran and fretted over its impact on global oil supplies.
Brent crude futures, the international benchmark for oil prices, hit their strongest since November 2014 at USD 77.76 per barrel today.
The 30-share Sensex rose over 128 points in morning trade and shot up to 35,500.76, but quickly lost momentum to hit the day's low of 35,203.85. It finally ended 73.08 points, or 0.21 per cent lower at 35,246.27.
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The Sensex had gained 403.97 points in the previous three sessions.
The broader NSE Nifty moved between 10,705 and 10,785.55, before ending 25.15 points, or 0.23 per cent down at 10,716.55.
Meanwhile, on a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 704.03 crore, while domestic institutional investors (DIIs) bought equities to the tune of Rs 664.92 crore yesterday, provisional data showed.
The rupee depreciated to fresh 15-month lows against the dollar, raising inflation and fiscal deficit concerns.
"Volatility continued despite positive global cues as investors remain cautious due to rise in oil price and weak INR.
"Banks/financials are under pressure due to rise in yield and earlier recognition of stressed assets. Results so far has not enthused investors' sentiment whereas next phase of results will be crucial as any deviation will create further downgrades," said Vinod Nair, Head of Research, Geojit Financial Services.
In the Sensex kitty, major laggards included Dr Reddy's (3.70 per cent), Tata Motors (2.34 per cent), Sun Pharma (1.85 per cent), Power Grid (1.77 per cent), Bajaj Auto (1.62 per cent), Tata Steel (1.44 per cent), NTPC (1.20 per cent), TCS (1.03 per cent), Yes Bank (0.91 per cent) and ITC Ltd (0.85 per cent).
However, ONGC rose 2.87 per cent, Bharti Airtel 1.92 per cent, RIL 0.55 per cent, HDFC Bank 0.54 per cent, Coal India 0.45 per cent, HDFC Ltd 0.25 per cent, IndusInd Bank 0.17 per cent and Axis Bank 0.15 per cent.
Sector wise, the BSE realty index lost the most by falling 2.02 per cent, followed by power 1.55 per cent, healthcare 1.52 per cent, consumer durables 1.27 per cent, capital goods 1.12 per cent, metal 1.04 per cent, infrastructure 1.03 per cent, FMCG 0.71 per cent, PSU 0.66 per cent, auto 0.63 per cent, IT 0.35 per cent and bankex 0.25 per cent.
While oil and gas, after struggling, managed to close in the green.
In broader markets, the BSE mid-cap index dropped 1.52 per cent while the small-cap index lost 1.36 per cent.
Shares of Federal Bank slumped nearly 12 per cent after the company reported a fall of 43.5 per cent in standalone net profit for the quarter ended March 2018.
Shares of state-run Indian Bank plunged 8.17 per cent after it reported a 59 per cent decline in net profit for the March quarter.
Overseas, Asian markets ended higher, with Japan's Nikkei rising 0.39 per cent and China's Shanghai Composite Index gaining 0.50 per cent. Hong Kong's Hang Seng moved up 0.96 per cent.