The BSE benchmark Sensex failed to maintain last week's gains and shed 108 points due to selling pressure mainly in auto, metal and banking sectors from operators and investors following cautious approach on fears of likely interest rate hike by RBI and weak global cues.
The 30-share barometer lost 107.94 points, or 0.59 % to end the week at 18,268.54.
The 50-scrip S&P CNX Nifty index on the NSE also declined by 30.95 points, or 0.56 % to settle below the 5,500-mark at 5,485.80.
However, the BSE Small-Cap index rose 49.77 points, or 0.60 % to 8,288.46 and the BSE Mid-Cap index gained 2.14 points, or 0.03 % to close at 6,898.28.
Global stock markets fell after Federal Reserve Chairman Ben Bernanke said US economic recovery was proving to be "uneven" and "frustratingly slow".
Political worries following reports that the DMK, a key UPA ally at the Centre, may opt to withdraw Ministers from the Cabinet after a high-level party meeting towards the weekend also affected the market sentiment.
Bike major Hero Honda fell by 7.25 % to 1,723.95 on reports that the strike by workers of Maruti Suzuki India's plant at Manesar in Haryana could spread across the auto belt of the northern state. Shares of Maruti fell 0.31 % to Rs 1,229.75.
Two-wheeler maker Bajaj Auto lost 3.3 % to Rs 1,325.50 on concerns that the firm's earnings will be adversely impacted if the Government does not extend the tax refund Duty Entitlement Pass Book (DEPB) scheme for exporters beyond June 30.
State-run explorer Oil and Natural Gas Corporation (ONGC) dipped 4.6 % to Rs 266.90 on reports that an independent audit of its overseas subsidiary ONGC Videsh has slashed the estimated immediately recoverable or proven reserves of the latter by one-third to 130 million tonnes.
Financial sector stocks fell as the RBI is seen raising its key lending rate at its mid-quarter monetary policy review on June 16 to tame inflation. State-run banking behemoth SBI lost 3 %, ICICI Bank shed 1.32 % and HDFC Bank slipped by 1.33 %.
Food inflation jumped to a two-month high of 9.01 % for the week ended May 28, on the back of costlier fruits, onions and protein-based items.
Metal stocks fell as weak US economic data raised doubts about global economic recovery. Hindalco Industries shed 2.6 % to Rs 184.45, Sterlite Industries lost 1.07 % to Rs 166 and Tata Steel declined by 0.75 % to Rs 569.20.
Among the sectoral indices, the BSE Auto index fell by 1.97 %, the BSE-Metal index shed 1.31 % and the Bankex dropped by 0.68 %. However, the BSE-Consumer Durable index shot up 3.16 % and the BSE-IT index gained 1.50 %.
The total turnover of BSE and NSE declined to Rs 12,540.55 crore and Rs 42,603.73 crore, respectively, from the last week weekend's level of Rs 13,654.50 crore and Rs 54,796.27 crore.