The 30-stock Bombay Stock Exchange (BSE) sensitive index (Sensex) ended 20.15 points lower at 3,516.11, its lowest close since February 12.
Dealers said, "The market sentiment was cautious, with investors choosing to remain on the sidelines ahead of a long weekend."
Losers outnumbered the gainers amid marginally higher volumes. On the National Stock Exchange (NSE), the S&P CNX Nifty Index shed 5.75 points to 1,138.45.
Blue-chip heavyweight counters led the decline. Reliance Petroleum slipped 1.22 per cent to Rs 26.45, on fears that the group's chances of bidding for state-owned firms like Hindustan Petroleum and Bharat Petroleum could be hit.
Reliance Industries ended flat at Rs 304. FMCG heavyweights such as Hindustan Lever (Rs 231) and ITC (Rs 707) also ended marginally lower.
Shares in state-run firms declined on concerns that the prevailing political instability could derail the government's privatisation programme.
MTNL (down 1.35 per cent to Rs 149.40) and Hindustan Petroleum (down 0.81 per cent to Rs 288) ended lower on selling pressure. SBI (down 1.93 per cent to Rs 223) also fell on similar concerns.
However, Chennai Petroleum (up 9.98 per cent to Rs 28.10) and Bongaigaon Refinery (up 9.55 per cent to Rs 7.45) bucked the trend and rose on reports that Indian Oil was examining its option of merging these companies with itself to consolidate its position in the deregulated oil market.
Engineers India (up 2.67 per cent to Rs 228) advanced on sustained buying. Hindustan Zinc (up 2.56 per cent to Rs 35.95) also advanced further on selective buying.
Most technology stocks ended weak after a firm opening. Infosys Technologies settled 3.66 per cent higher at Rs 3,832.90.
Among second-tier stocks, Polaris Software (up 1.69 per cent to Rs 204.40) advanced after the company said it had bagged orders from a large US-based financial services company.
Among media stocks, Zee Telefilms (down 3.31 per cent to Rs 159.35) lost further ground on sustained selling pressure after recent gains.
TV-18 India (down 3.45 per cent to Rs 102.05) declined after the company announced that Octopus VC was proposing to pick a 6 per cent stake in the company at Rs 88 per share.
