The benchmark Bombay Stock Exchange (BSE) Sensex slipped by 57 points to close at 27,506.71 points due to across the board selling mainly in pharma, banking and oil stocks as the monthly derivatives contracts expired on Thursday.
Across-the-board selling on the last day of May series derivatives contracts, growing concerns over muted corporate earnings so far and mixed global cues pulled down markets, brokers said.
Participants were seen offloading their long positions in Futures and Options (F&O) segment instead of carrying them forward to the next series for June month, they said.
"The F&O expiry and other negative factors including disappointing Q4 earnings by more bluechip companies have been hurting market sentiments," said a Delhi-based stock broker.
Meanwhile, rating agency Moody's said that India's growth rate in the January-March quarter is likely to slip to 7.2 per cent from 7.5 per cent in the previous three months.
The BSE 30-share barometer opened on a firm note and advanced to the day's high of 27,666.37 following covering-up of short positions and value-buying in bluechip stocks.
However, offloading of positions by participants in view of May month expiry pulled it into negative zone to touch a low of 27,354.35. The Sensex finally settled down 57.95 points, or 0.21 per cent at 27,506.71. The gauge had gained 33.25 points in Wednesday's volatile session.
The 50-issue Nifty of National Stock Exchange (NSE) continued its slide for the fourth session and lost another 15.60 points to close at 8,319. It touched a low of 8,270.15 in day trade but a flurry of buying at the fag-end trimmed losses.
In Asia, markets finished mostly mixed, while Eruopean markets were down in early trade amid Greek financial woes.
Market heavyweights like Cipla plunged 2.58 per cent, Tata Power fell 2.18 per cent, Sun Pharma tumbled 1.94 per cent, M&M declined 1.93 per cent and Bharti Airtel lost 1.76 per cent.
Caution ahead of earnings announcements also dragged down shares of Hindalco by 1.57 per cent.
Other prominent losers were Dr Reddy's, RIL, SBI, Tata Steel, Hind Unilever, ONGC, HDFC, HDFC Bank, Maruti Suzuki, Axis Bank and Bajaj Auto.
Foreign Portfolio Investors sold shares worth Rs 934.98 crore on Wednesday, as per provisional data.
In the 30-Sensex constituents, 18 ended lower, 11 closed higher, while Hero and GAIL closed unchanged.
Among gainers, Tata Motors which has been under pressure since the company's Q4 earnings, regained buying support at lower levels and recovered by 2.52 per cent.
Sectorwise, the BSE Healthcare index suffered the most by losing 1.31 per cent, followed by Banking (0.51 per cent), Metal (0.38 per cent), Infrastructure (0.20 per cent), Realty (0.15 per cent) and Capital Goods (0.05 per cent).
Selling pressure also dragged down the BSE Smallcap index by 0.16 per cent and Midcap index by 0.53 per cent.