The BSE Sensex dropped by 150 points to close at 33,685.54 in a volatile trade, extending losses for a third day as banking, FMCG and IT shares fell amid fresh LoU fraud scare.
Banking stocks led by Yes Bank, ICICI Bank, Axis Bank and SBI came under heavy selling pressure after the CBI registered a fresh case relating to "fraudulent" issuance of Rs 9 crore of LoUs to Chandri Papers and Allied Products by PNB's Brady House branch.
Asian markets ended mixed after the Wall Street declined amid concerns that the US could impose severe tariffs on Chinese imports and that the US Federal Reserve could raise interest rates as early as next week.
Traders are also awaiting trade deficit data for February due later in the day, a broker said.
The World Bank and Fitch projected India's GDP growth at 7.3 per cent for the next financial year and accelerate further to 7.5 per cent in 2019-20, which helped limit the fall.
After opening in the positive zone at 33,843.47, the Sensex advanced to the day's high of 33,866.28 at the outset.
It later gave up gains and fell to a low of 33,637.28, dragged down by banking stocks.
However, the index managed to recoup some of the losses after European shares opened better. The 30-share barometer closed down by 150.20 points, or 0.44 per cent at 33,685.54.
The benchmark had lost 82.20 points in the previous two sessions.
The broader NSE Nifty, after cracking below the key 10,400-mark, touched a low of 10,346.20, before finally ending down 50.75 points, or 0.49 per cent, at 10,360.15.
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