After a better start at 19639.83, the Sensex tumbled by 110.90 points, or 0.57 per cent to 19,497.18 as investors adopted a cautio stance, wiping a major portion of the 147 point gained in past two days.
The broad-based National Stock Exchange index Nifty lost 36 points, or 0.61 per cent to 5,896.95, after touching the day's high of 5,940.20.
Bharti Airtel slumped by 4 per cent after reports said it faces significant spectrum charge demand by DoT.
Wipro fell by 3.3 per cent on selling due to its exclusion from NSE Nifty index from April 1, while Maruti Suzuki lost over 3 per cent on being dropped from MSCI India index from February 28.
State Bank of India shares also lost nearly 1.80 per cent after a lower-than-expected increase in net profit for the third quarter ended December 31, 2012.
Similarly, RIL and L&T lost over 2.6 per cent each.
Declining for the fourth straight month, WPI inflation fell to a 3-year low of 6.62 per cent in January but the data failed to spur rate cut hopes.
"After a disappointing IIP numbers but an easing inflation rate, investors are in a state of uncertainty regarding rate cuts in near future," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio Ltd.
A slew of weak third quarter earnings from GVK Power and Tata Steel also dampened the market sentiment.
Sectorally, the capital goods sector suffered the most by falling 2.27 per cent, followed by oil and gas index 1.59 per cent, auto index 1.49 per cent and power index 1.25 per cent.
Markets @ 01.30 PM (Reuters)
The Sensex falls 0.1 percent, while the Nifty is down 0.26 percent, despite lower-than-expected wholesale inflation data on caution ahead of the presentation of the 2013/14 budget at the end of the month.
India's annual wholesale price inflation slowed to 6.62 percent in January, government data showed on Thursday, lower than 7 percent expected in a Reuters poll of economists.
Shares briefly turned positive after the WPI data, but traders say the Reserve Bank of India will also factor in the persistent current account deficit into its monetary policy decisions, making the outlook of rate cuts in the rest of the year still uncertain.
State Bank of India shares fall 1.3 percent ahead of earnings due later in the day.
Tata Motors Ltd falls 2.25 percent on fears that third-quarter results may miss estimates.
However, software services exporters extend Wednesday's gains on hopes for improved earnings in fiscal 2014. Infosys Ltd shares gain 1 percent, while Tata Consultancy Services Ltd is up 1.1 percent after earlier hitting a new all-time high.
Markets @ 10.30 AM (Reuters)
The BSE benchmark sensex failed to maintain initial gains and was quoted lower by 19 points inflation numbers due to selling pressure mainly in Auto, Consumer Durable, Capital Goods, Healthcare and Power sectors.
The sensex resumed higher at 19,626.81 and firmed up further to a high of 19,639.83 on sustained buying on the back of higher Asian cues coupled with persistent capital inflows from foreign funds into equity market.
However, it declined afterwards to 19,587.48 on mild selling before quoting at 19,589.42 at 1030hrs, showing a net loss of 18.66 points or 0.10 per cent from its last close.
The NSE 50-share Nifty also moved down by 8.65 points or 0.15 pct to 5,924.30 at 1030 hrs.
Major losers were Maruti Suzuki (2.99 pct), Bharti Airtel (2.49 pct), Wipro (2.27 pct), Tata Power (2.23 pct), Reddy's Lab 2.15 pct and SBI (1.86 pct).
Foreign institutional investors bought shares worth net Rs 800.31 crore yesterday as per provisional data from the stock exchanges.
Asian stocks rose in the early trade as investors awaited the G20 meeting of finance and central bank officials over the weekend for clues to their views about global growth and the role currencies play in the economies of individual member countries.
Key benchmark indices in Hong Kong, Indonesia, Japan, and South Korea rose by 0.21 per cent to 0.89 per cent while Singapore's Straits Times fell 0.21 per cent.
Markets @ 09.00 AM (PTI)
The BSE benchmark Sensex gained nearly 20 points in early trade today on selective buying by funds and retailers amid a firming Asian trend.
The 30-share barometer rose by 19.71 points, or 0.10 per cent, to 19,627.79. The index had gained over 147 points in the previous two sessions.
Similarly, the wide-based National Stock Exchange index Nifty edged up by 5.05 points, or 0.09 per cent, to 5,938.
Brokers said selective buying by funds and retailers in IT, Realty and Refinery sectors stocks amid a firming trend in Asian region mainly influenced the sentiment.
Among Asian markets, Hong Kong's Hang Seng rose by 1.06 per cent, while Japan's Nikkei by 0.55 per cent in early trade today.