After opening in positive zone, the BSE Sensex slipped on selling in heavy-weight stocks, to close lower by 55.16 points, or 0.22 per cent, at 25,313.74. Intra-day, it moved between 25,427.80 and 25,274.39.
The gauge had rallied 337.58 points in the previous session as fall in crude prices had eased inflation concerns.
Automobile company stocks caught buyers' fancy at the fag-end after government extended excise duty concessions by six months. Gains in Bajaj Auto, Maruti Suzuki, Hero MotoCorp, Tata Motors and M&M helped the BSE benchmark cap losses.
The 50-scrip NSE index Nifty shed 10.95 points, or 0.14 per cent, to end at 7,569.25 after touching day's high of 7,589.25. Intra-day, it hit a low of 7,557.05.
Militants launched a dawn raid today on a key Iraqi oil refinery they have been trying to take for days but were repelled by security forces. US benchmark West Texas Intermediate (WTA) rose 17 cents to USD 106.20 a barrel while Brent crude eased 65 cents to USD 113.81.
Brokers said investors, who had been buying in the past few sessions, trimmed positions by booking profits ahead of tomorrow's monthly expiry in futures and options contracts.
Besides, a weak trend in other Asian markets and a lower opening in European markets also influenced the sentiment.
"Investors are now waiting for the Budget that shall be announced in early next month. Till then, market is likely to continue with volatility and show consolidation," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
RIL shares came under pressure and ended 0.84 per cent down following reports government would slap a fresh fine.
In the 30-scrip Sensex, 14 stocks, led by RIL, declined. They include ICICI Bank, Bharti Airtel, Axis Bank, HDFC Bank and L&T. On the other hand, 16 Sensex constituents gained.
The BSE Auto index ended in positive zone with a rise of 0.76 per cent. Sectorally, the BSE Oil and Gas index fell the most (0.79 per cent), followed by Capital Goods (0.70 per cent), Banking (0.43 per cent) and FMCG index.
On the other hand, BSE Small Cap index closed 0.35 per cent higher and BSE Mid Cap index by 0.52 per cent.
Vivek Gupta (Director Research, CapitalVia Global Research Ltd) Gold fell on in the beginning of week as physical buying dried up after prices jumped to their highest level in two months, while Silver also slipped from a three-month top. Weak physical demand kept prices under pressure. However, rise in Geopolitical tension in Iraq and ongoing dispute between Russia and Ukraine upsurge the demand for safe haven. For next week, we can expect COMEX Gold August Futures prices to trade on the negative note as investors will remain cautious ahead of economic data from US and Euro Zone. It could be expected to move downside and below the level of $1290, it could test the levels of $1270 and $1250 .If MCX Gold August futures sustains below 27450, then downside movements can be seen till the levels of 27250 and 27050.
Anindya Banerjee, currency analyst, Kotak Securities: Indian Rupee, which weakened at the open, due to uptick in global petroleum prices, touched an intra-day low of 60.39 levels against the US Dollar on spot. However, hedging demand from ITes sector, pushed it back up towards 60.17/18 levels on spot. PSU bids were absent in todays session and there was little inter-market effect from a largely ranged equity market. Over the near term, we expect a range of 59.80/90 and 60.45/55 on spot. We need to keep an eye on oil prices, as Rupee remains a high beta play on Middle East geo-politics.