Extending its fall for the third session, the BSE benchmark Sensex on Thursday ended marginally lower after investors squared-off positions as February derivative contracts expired amid concerns over tension between India and Pakistan.
Weak cues from other Asian markets and a lower opening of European equities too weighed on market mood, experts said.
The 30-share index took off on a strong footing, advancing to a high of 36,085.85 in early session largely on the back of sustained foreign fund inflows and covering-up of short positions by speculators.
However, selling activity re-emerged in line with weak domestic and global cues, pushing the index to a low of 35,829.15. It finally settled 37.99 points, or 0.11 per cent lower at 35,867.44.
The gauge had lost 308 points in the previous two sessions.
The 50-share Nifty also fell 15.70 points, or 0.13 per cent, to 10,792.50 after moving between 10,865.70 and 10,784.85 on alternate bouts of buying and selling.
"Market continued the rangebound movement due to futures and options (F&O) expiry while mid and small-cap indices outperformed as investors believe that border tensions won’t continue for long," said Vinod Nair, Head of Research, Geojit Financial Services.
"Additionally, focus is likely to shift to economic data and possibility of pre-election rally while FII inflow is picking up and rupee is gaining strength," he added.
Among Sensex components, TCS emerged biggest loser by falling 3.38 per cent, while Maruti Suzuki lost 1.77 per cent.
Other laggards include Hero MotoCorp falling 1.49 per cent, M&M 1.42 per cent, Axis Bank 1.18 per cent, Tata Steel 0.90 percent, HCL Tech 0.67 per cent, Bharti Airtel 0.63 per cent, Bajaj Auto 0.54 per cent, HDFC Bank 0.45 per cent, Kotak Bank 0.28 per cent, HUL 0.25 per cent, IndusInd Bank 0.23 percent and Infosys 0.10 per cent.
However, ONGC topped the gainers' list, climbing 4.17 per cent, followed by Coal India up 3.16 per cent.
Also, Vedanta, NTPC, Yes Bank, SBI, L&T, ICICI Bank, Sun Pharma, RIL, PowerGrid, ITC, Tata Motors, Bajaj Finance, HDFC and Asian Paints gained up to 2.88 per cent.
Sector-wise, the BSE IT index suffered the most by falling 1.02 per cent, followed by teck down 0.93 per cent and auto 0.67 per cent.
However, consumer durables, oil and gas, capital goods, PSU, realty, power, FMCG and bankex indices ended higher by up to 1.29 per cent.
The broader markets were in better shape with the small-cap index rising 0.86 per cent and mid-cap index gaining 0.49 per cent.
Investors adopted a cautious approach and were seen squaring-off their positions instead of carrying forward to the March series in the wake of tension between India and Pakistan, brokers said.
Market participants were also cautious ahead of the release of GDP numbers and fiscal deficit data scheduled for later in the day.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net of Rs 423.04 crore, while domestic institutional investors (DIIs) made purchases to the tune of Rs 66.81 crore Wednesday, provisional data showed.
Elsewhere in Asia, Korea's Kospi fell 1.76 per cent, Japan's Nikkei was down 0.79 per cent, Straits Times shed 0.97 per cent and Shanghai Composite Index dropped 0.44 per cent.
A similar trend also emerged in European shares with Frankfurt's DAX falling 0.31 per cent and Paris CAC 40 shed 0.13 per cent. London's FTSE too declined 0.82 per cent.