The benchmark Sensex pared its early gains and fell by over 160 points in late morning trade as investors sold shares to book profits amid firm global cues.
The Bombay Stock Exchange barometer was quoted at 16,701.65 points at 1100 hrs, a loss of 164.76 points from its previous close. The Sensex had opened higher by 112 points.
The broader 50-share Nifty of the National Stock Exchange also fell by 34.85 points or 0.70 per cent to 4,968.35 at 1015 hours from its last close.
Brokers said investors booked profits in early trade amid continued concerns that the liquidity situation in the secondary market may be affected by proposed fund raising programmes by companies in the primary market.
Asian indices, however, were trading in the green in early trade.