In their biggest drop in nearly six weeks, benchmark Sensex on Tuesday tumbled 161 points to 28,338.05 and Nifty index fell 67 points to 8,463.10 from record highs due to profit-booking and worries over new norms on P-Notes.
Shares of Realty, FMCG, Power, Metal, Consumer Durables, Banking, Capital Goods and Auto fell on heavy selling. The BSE Sensex resumed higher at 28,520.76 and firmed up to 28,541.22.
The gains proved to be short-lived as it dropped immediately to 28,217.50 before finally ending at 28,338.05, a loss of 161.49 points or 0.57%.
This was its biggest single-day loss since October 16 when it shed 350 points. The Sensex had gained 466.69 points, or 1.66%, in the previous three trading sessions.
Similarly, the CNX 50-share Nifty moved down by 67.05 points, or 0.79%, to finish at 8,463.10 after hitting all-time high of 8,535.35 in the early trade.
Amid concerns about possible misuse of Offshore Derivative Instruments, or P-Notes, for money laundering and other such purposes, Sebi on Monday directed foreign investors to ensure compliance with all necessary norms before issuing such notes with immediate effect.
This, some market analysts, said hurt sentiments on Tuesday. "Correction in markets could (also) be attributed to profit booking from retail investors and due to some stock specific news. Among day's major market moving events, ITC was down by more than 5% intraday after on reports government has accepted the recommendation of ban of loose cigarettes," said Hiren Dhakan, associate fund manager, Bonanza Portfolio.
The market may remain volatile this week as traders said participants are rolling over positions in the futures & options (F&O) segment from November to December 2014 series.
Asian stocks ended mixed as key benchmark indices in Hong Kong and Taiwan fell by 0.07% to 0.21% while indices in China, Japan, Singapore and South Korea rose by 0.08% to 1.37%.
European markets were also trading higher after latest data showed Germany's GDP rose 0.1% in third quarter. Key benchmark indices in Germany, France and UK rose by 0.11% to 0.73%.