BSE Sensex closed 247.55 points or 0.61 per cent lower at 40,239.88.
The 30-share index was trading 33.67 points or 0.08 per cent lower at 40,453.76 in morning trade.
According to sources, exchanges system is not able to handle such a large number of transactions at the closing time.
The 30-share BSE Sensex stabilised in afternoon trade and settled with gains of 42.28 points or 0.10 per cent at 40,487.43.
The US Federal Reserve interest rate decision on Thursday will be a major event that would be keenly tracked by markets globally.
According to the depositories data, foreign investors pulled out a net sum of Rs 1,668.8 crore from equities.
Reliance Industries Limited (RIL), ICICI Bank, Kotak Mahindra Bank and Infosys were among the gainers.
The BSE Sensex settled at 40,445.15, down 334.44 points or 0.82 per cent.
The BSE gauge Sensex moved 103.13 points higher to trade at 40,882.72 in opening deals.
At the closing bell, the 30-share BSE Sensex was lower by 70.70 points or 0.17 per cent at 40,779.59.