HDFC and HDFC Bank were the top laggards in the Sensex pack, shedding 2.01 per cent and 1.90 per cent respectively, followed by Maruti, Dr Reddy's, Asian Paints, PowerGrid, Bajaj Finserv and Kotak Bank.
NSE Nifty dipped 54.65 points to close at 17,475.65.
Equity indices gave up early gains to close in the red for the third session on the trot on Wednesday, weighed by selling in banking and finance counters amid inflationary pressures and persistent foreign fund outflows.
A weak rupee and lacklustre global cues also kept buying sentiment in check, traders said.
The 30-share BSE Sensex opened on a firm footing but failed to hold on the momentum, finishing 237.44 points or 0.41 per cent lower at 58,338.93.
On similar lines, the broader NSE Nifty dipped 54.65 points or 0.31 per cent to close at 17,475.65.
HDFC and HDFC Bank were the top laggards in the Sensex pack, shedding 2.01 per cent and 1.90 per cent respectively, followed by Maruti, Dr Reddy's, Asian Paints, PowerGrid, Bajaj Finserv and Kotak Bank.
In contrast, ITC, Sun Pharma, Hindustan Unilever Limited, State Bank of India, NTPC and Bajaj Finance were among the prominent gainers, spurting as much as 1.87 per cent.
"Markets remained under pressure and ended marginally lower, in continuation of the prevailing corrective phase.
"Initially, firm Asian markets led to a gap-up opening, however the gains fizzled out in no time due to selling pressure in auto and banking heavyweights.
"Meanwhile, sectoral and broader indices traded mixed which kept the participants busy till the end," said Ajit Mishra, VP - Research, Religare Broking Ltd.
Stock markets will be closed on Thursday for Mahavir Jayanti and Dr Babasaheb Ambedkar Jayanti, as well as on Friday on account of Good Friday.
In the holiday-truncated week, the Sensex tumbled 1,108.25 points or 1.86 per cent, while the Nifty lost 308.70 or 1.73 per cent.
"The onset of the earnings season, the release of key inflation data and ECB policy meeting drove the market this week.
"Hyperinflation and the risk of elevated policy rate hike placed the global market on its toes impacting the performance of equities with rise in yield.
"India's CPI inflation, which stood at 6.95 per cent in March, is expected to remain on the higher side in Q1 FY23 but is expected to subside on hopes of a reversal of commodity prices and improvement in supply. With the start of the earnings season, the domestic market is also likely to be buoyed by sector-specific momentum in the coming days," said Vinod Nair, head of research at Geojit Financial Services.
India's retail inflation soared to a 17-month high of 6.95 per cent in March, and remained above the Reserve Bank's upper tolerance level, while factory output grew just 1.7 per cent in February, according to official data released post market hours on Tuesday.
In the broader market, the BSE smallcap gauge gained 0.27 per cent, while the midcap index dipped 0.21 per cent in Wednesday's session.
Among BSE sectoral indices, auto fell the most by 0.85 per cent, followed by finance (0.73 per cent), bank (0.65 per cent) and telecom (0.59 per cent), while oil and gas (0.87 per cent) and capital goods (0.80 per cent) were among the gainers.
World stocks were mixed after the US and UK reported multi-decade high retail inflation prints in March, raising the prospects of aggressive rate hikes by central banks while the Russia-Ukraine war puts further pressure on global supply chains.
In Asia, markets in Hong Kong, Seoul and Tokyo ended in the green, while Shanghai slipped.
Bourses in Europe were mostly trading lower in the afternoon session. Stocks in the US ended with modest losses overnight.
International oil benchmark Brent crude gained 0.56 per cent to $105.23 per barrel.
The rupee dipped 2 paise to 76.17 against the US dollar on Wednesday, tracking a firm greenback in the overseas market and weak domestic macroeconomic data.
Foreign institutional investors remained in selling mode, offloading shares worth a net Rs 3,128.39 crore on Tuesday, according to exchange data.
