After a choppy session, the markets closed on a flat note, weighed down by selling in oil & gas and IT counters.
The Sensex closed down 14 points at 18,731 while the Nifty closed unchanged at 5,688.
The broader markets, however, managed to retain some of its gains as the mid and small cap indices closed up 0.2-0.3%, outperforming the BSE benchmark index which closed flat with a negative bias.
Meanwhile, India's current account deficit could ease to around 3% in the current fiscal year from prior estimates of about 4% due to sharp drop in global commodity prices, analysts said.
Barclays in a research note said, "The immediate and most visible impact would be on the current account balance, which could improve by nearly 1 percent of GDP in FY13-14, on our estimates," Barclays said in a research note.
In Asia, Japan's Nikkei share average rose, recouping some of the recent sharp losses, helped by demand for exporters as the yen resumed its recent weakening trend after U.S. stocks and gold prices rebounded. The Nikkei closed up 1.2% at 13,383.
Hong Kong shares fell for a fourth consecutive session on Wednesday, as investors remained uncertain over China's economic recovery and weak sales hit luxury stocks. The Hang Seng Index closed down 0.5% at 21,569. The Shanghai Composite Index also fell 0.1%.
European shares sank by over one percent on Wednesday despite a recovery on Wall Street and across Asia, as investors positioned for sluggish growth in the euro area and ongoing monetary policy easing in the U.S. and Japan. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were trading lower by 0.5-12%.
Back home, among the sectoral indices, Oil & Gas, IT and Power closed in the negative, down 0.2-2%. On the other hand, metal, FMCG, Auto, Health Care, Bankex and Realty indices gained 1% each.
Oil & Gas was weighed down by losses in Reliance Industries, down nearly 4% along with ONGC down 1%.
IT shares fell tracking rupee's appreciation and on worries about a proposed U.S. Senate immigration bill may lead to outsourcing firms paying higher fees and wages to H-1B visa workers. Frontline stocks like Infosys, TCS and Wipro declined 0.5-1.8%.
However, banks continued to gain on hopes of a rate cut on lower-than-expected WPI in March along with the recent slump in commodity prices. SBI and ICICI Bank were the major gainers, up 1.8-2.8%.
The top gainers among the Sensex-30 were Sterlite, Mahindra & Mahindra, Sun Pharma, ITC, Bajaj Auto and Maruti Suzuki up 1-4%.
Among the losers were HDFC, Tata Power, Dr Reddys Lab, Hindustan Unilever, HDFC Bank, Tata Steel and L&T down 0.3-1.5%.
In other stocks, Yes Bank moved higher by 2% to Rs 479 on reporting a strong 33% year-on-year jump in net profit at Rs 362 crore for the quarter ended March 2013 (Q4) on back of higher interest and other income.
Fresenius Kabi Oncology soared 5.6% to Rs 134 after the pharmaceutical company said that its Singapore-based promoter seeks voluntary delisting of shares of the company from the Indian bourses.
HMT rallied 19% to Rs 33.85 on back of heavy volumes on reports that the government is mulling Rs 1,000 crore revival plans for the company.
Shares of associate banks of State Bank of India (SBI) such as State Bank of Bikaner and Jaipur, State Bank of Travancore and State Bank of Mysore rallied 1-3% on hopes of merger with SBI.
In continuation of its past performance, HCL Technologies, India's fourth largest IT services company, on Wednesday delivered strong set of numbers well above the market estimation. However, the stock closed in the red, down 1.5%.
The market breadth was negative. 1,199 stocks declined while 1,128 stocks advanced on the BSE.