The market closed lower with losses in a highly volatile session today as investors booked profits ahead of US Federal Reserve's policy outcome.
The 30-share BSE index swung nearly 581 points on alternate bouts of buying and selling. Investors were also cautious in view of the expiry of September derivative contracts on Thursday, brokers said.
The Sensex touched a high of 36,938 at the outset after domestic investors pressed on with buying. However, it soon turned choppy and hit a low of 36,357. It finally closed lower by 109.79 points, or 0.30 per cent, at 36,542.
The gauge had soared 347.04 points on Tuesday on value-buying in banking and FMCG stocks after recent heavy losses.
"People are uncertain. What happened with IL&FS could open a can of worms. Gains will be temporary as the markets are still in a downtrend," said Sudhakar Pattabiraman, Head of Research Operations at William O'Neil India.
"There are also global factors such as crude prices, the dollar and the trade war," Pattabiraman added.
The Nifty closed lower by 13.65 points, or 0.12 per cent, at 11,053.80. Intra-day, it shuttled between 11,145.55 and 10,993.05.
Brokers said investor sentiment turned choppy on selling by foreign institutional investors (FIIs) ahead of the September month derivatives expiry on Thursday.
On a net basis, FIIs sold shares worth Rs 1,231.70 crore Tuesday, while domestic institutional investors (DIIs) bought shares to the tune of Rs 2,284.26 crore, as per provisional data.
Investors also awaited policy cues from the US Federal Reserve, which is widely expected to raise interest rates.
Vedanta Ltd (4.75%), YES Bank (1.73%), Reliance Industries (1.72%) were the top Sensex gainers.
Tata Motors (3.15%), Wipro (2.91%), and ITC (2.67%) were the top Sensex losers.
Meanwhile, the BSE mid cap index closed 0.42% higher at 15,341 level. The BSE small cap index gained 0.12% at 15,239.54.
BSE IT index was the top loser falling 1.60% to 15,592 level on profit booking.
Auto stocks too came under selling pressure losing 0.99% at 22,403 level.
Market breadth was marginally negative with 1282 stocks closing higher compared with 1346 ending in the red on BSE.
Stock markets around the world were trading in narrow ranges Wednesday ahead of a widely predicted interest rate hike from the US Federal Reserve and the potentially more interesting subsequent press conference from its chairman, Jerome Powell.
In Europe, France's CAC 40 added 0.2 percent to 5,488 while Germany's DAX fell 0.3 percent to 12,341. Britain's FTSE 100 was down 0.1 percent at 7,500. U.S. stocks were poised to open modestly higher with Dow futures and the broader S&P 500 futures up 0.2 percent.
Japan's Nikkei 225 index rose 0.4 percent to 24,033.79. Hong Kong's Hang Seng index, which reopened after a holiday, jumped 1.2 percent to 27,816.87. The Shanghai Composite Index added 0.9 percent to 2,806.81. Australia's S&P ASX 200 gained 0.1 percent to 6,192.30.