The benchmark Sensex recovered most of the losses suffered in early trade but still closed the day lower by over 60 points.
Marketmen attributed the early tosses to investors concerns that India Inc's profits could take a hit as domestic and global economic growth slow down.
However, financial companies and banking stocks saw a late recovery on expectations of lending rates remaining unchanged for the time being after a moderate decline in inflation.
The 30-share Sensex closed down by 66.02 points at 14,498.51. It touched the day's low of 14,281.10 and a high of 14,547.41 points.
The wide-based National Stock Exchange index Nifty also fell by 11.35 points at 4,348.65. The index breached 4,300 points level during the day to hit a low of 4,281.35, and touched the day's high of 4,365.00 points.
Initially, the bank sector index plunged to 6,823.41- point level before ending with a moderate gain of 11.66 points at 7,021.35. Similarly, another interest rate sensitive index realty also managed to end the day on positive terrain.
PSU, oil and gas, banking and FMCG segments ended with gains of less than one per cent.
Metal index suffered the most by 133.91 points at 12,214.11 on the back of a fall in stocks of Nalco, Jindal Steel, Tata Steel, Sesa Goa and SAIL.