Sensex stumbled for the fifth day as it touched a fresh six-month low due to continuous foreign outflows after Fed chair Janet Yellen signalled a rate hike in December policy review.
The rupee too played spoilsport, dropping below the 68-level against the dollar after nearly five months to trade at 68.18 during afternoon trade, before closing at 68.13.
"Any uptick in the market is short lived as participants are shying away from taking fresh positions. The signals from US Fed on December rate hike has inflicted more pain on the rupee and equities, which was already reeling from the demonetisation," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Sentiment took a hit after US Federal Reserve chief indicated that the central bank may hike interest rates next month, lifting the dollar to almost 14-year highs against a basket of major currencies, leading to acceleration in capital outflows by foreign funds, brokers said.
Sensex, after falling to a low of 26,106.78 on sustained foreign fund outflows, recovered briefly to touch 26,349.02, before dipping again by 77.38 points, or 0.30 per cent, to 26,150.24, its lowest level since May 25, 2016.
The index has dropped by 1,367.44 points or 4.97 per cent in five days on lingering worries about the economic impact of demonetisation.
For the week, the Sensex crumbled 668.58 points, or 2.49 per cent, while the Nifty plunged 222.20 points, or 2.67 per cent.
The NSE 50-share Nifty today moved lost 5.85 points or 0.07 per cent to end at 8,074.10.
Foreign funds continued their selling spree, offloading shares worth a net Rs 983.93 crore yesterday, as per provisional data released by the stock exchanges.
Asian stocks witnessed a mixed trend. According to minutes of the European Central Bank's (ECB) most recent meeting, policymakers were ready to boost their 1.7 trillion euro stimulus again if needed to ensure that Eurozone's economy remains on its recovery path.
Key indices in Hong Kong, Japan, Singapore and Taiwan rose by 0.15 per cent to 0.89 per cent while China and South Korea fell by 0.30 per cent to 0.49 per cent.
European markets were showing a muted trend in their late morning session.
Sensex saw choppy trade throughout the session. After
remaining under pressure in early trade, emergence of value-buying in several bluechips on increased buying by domestic financial institutions and higher opening of the European markets led the index higher, where it again succumbed to profit-booking.
Broader markets, however, outperformed the Sensex, with the BSE Mid-Cap index rising 0.61 per cent and the small-cap index gaining 0.25 per cent.
A total of 16 stocks in the 30-share Sensex pack ended lower, while the remaining 14 closed with gains.
Major losers were Tata Steel (2.00 per cent), ITC (1.92 per cent), Gail (1.76 per cent), HDFC Bank (1.47 per cent), Adani Ports (1.25 per cent), Asian Paints (1.20 per cent), ICICI Bank (1.18 per cent), Infosys (1.05 per cent) and HUL (1.02 per cent).
However, NTPC rose by 4.58 per cent, followed by Sun Pharma (2.62 per cent), Bharti Airtel (2.33 per cent), Hero MotoCorp (2.15 per cent), M&M (1.59 per cent), Bajaj Auto (1.19 per cent) and Cipla (0.93 per cent).
Among the sectoral indices, consumer durables fell 1.26 per cent, followed by metal (1.19 per cent), FMCG (0.96 per cent), Bankex (0.60 per cent), Teck (0.56 per cent), IT (0.55 per cent) and financial service (0.30 per cent).
Oil&Gas rose by 1.45 per cent, healthcare 1.29 per cent, realty 1.26 per cent, power 1.22 per cent, utilities 1.07 per cent and energy 1.06 per cent.
Market breadth turned positive as 1,328 stocks ended higher, 1,253 finished in red while 166 ruled steady.
Total turnover on BSE stood at Rs 2,412.00 crore, lower than Rs 2,660.23 crore registered during the previous trading session.
Globally, other Asian markets ended mixed, with Shanghai Composite Index declining 0.49 per cent, while Japan's Nikkei rose 0.59 per cent and Hong Kong's Hang Seng gained 0.37 per cent.
European markets were showing a muted trend in their late morning session with key indices like London's FTSE declining 0.64 per cent and France's Paris CAC dropping 0.53 per cent and Germany's Frankfurt dipping 0.25 per cent.
