The benchmark BSE Sensex fell by 31 points to close at one-and-a-half month low of 27,319.56 due to continued selling in IT, FMCG, banking and oil stocks amidst disappointing economic data and capital outflows.
In addition, a weak rupee which hit nearly 11-month low of 62.92 against the dollar (intra-day Monday) also weighed on the market sentiment.
In a highly volatile trade, the 30-share BSE index fell by over 245 points in early trade due to selling pressure after October industrial production contracted sharply and a weak trend in the Asian region.
Later, it recovered the losses to hit day's high of 27,392.10 points after official data showed that wholesale price index-based inflation fell to zero level in November.
However, profit booking at every rise dragged the Sensex down by 31.12 points, or 0.11%, to close at 27,319.56. The barometer lost 480.42 points in the previous two sessions.
The 50-share Nifty of NSE dipped below the crucial 8,200-mark to touch a low of 8,152.50 in early trade. Later it settled down by 4.50 points, or 0.05% at 8,219.60.
Brokers said sentiments dampened on disappointing economic data as industrial production contracted by 4.2% in October.
However, data showing retail inflation easing to a fresh low of 4.38% in November and WPI inflation hitting zero level in November restricted the fall, they said.
Of 30 Sensex scrips, 21 ended with losses. Sesa Sterlite (2.39 pc), Axis Bank (1.30 pc), Cipla (1.27 pc) Tata Motors
(1.24 pc), Hind Unilever (0.88 pc), Infosys (0.77 pc), ITC Ltd (0.71 pc), L&T (0.69 pc), Tata Steel (0.67 pc) and RIL (0.58
pc) were among major losers.
However gains in HDFC, Coal India and ONGC helped Sensex to trim its losses.
The BSE Realty index suffered the most by losing 2.07%, followed by Consumer Durables by 2.02%, IT index by 1.94% and FMCG by 0.97%.
Foreign portfolio investors sold shares worth Rs 864.96 crore last Friday as per provisional data.