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Markets closed flat with negative bias as investors turned cautious ahead of the expiry of April derivative contracts on Wednesday.
This decline was following a near 500 point rally over the last two trading sessions.
After both the Sensex and Nifty hit their respective record all time highs for second consecutive session, benchmark indices edged lower in late trades amid profit booking emerged in select blue chips.
At close, the Sensex ended down six points at 22,758 and the Nifty edged lower by two points to close at 6,815.
The market will remain volatile this week as traders roll over positions in the futures & options segment from the near month April 2014 series to May 2014 series.
The April 2014 F&O contracts expire on Wednesday, 23 April 2014.
Earlier in the day, both the Sensex and Nifty hit their respective record all time highs for second consecutive session.
The Sensex gained as much as 0.4 percent to 22,853.03, while the Nifty advanced as much as 0.3 percent to hit a record high of 6,831.75.
Broader markets too reversed its earlier gains and closed lower. The smallcap index added a single point while the midcap index slipped 0.1%.
Sectors & Stocks
On the sectoral front, BSE Capital Goods and Oil & Gas indices surged by over 1% each. However, BSE Metal, IT, Realty, Power, Auto and FMCG indices declined by 0.3-0.6%.
Oil and gas stocks have gained on renewed buying with shares of BPCL scaling record high and HPCL hitting 52-week high in intra-day trades.
Index heavyweight Reliance Industries trimmed intraday gains after hitting 52-week high. The stock was up 1% at Rs 968.
The main gainers on the Sensex were L&T, GAIL, ONGC, HDFC Bank and Hindalco, all gaining between 1-2%.
HDFC Bank firmed up after reporting a 23% increase in net profit for the quarter ended March 2014.
The stock is trading at Rs 726, up Rs 9 or 1.2%, on the BSE.
Metal and mining stocks were mostly lower ahead of provisional reading of HSBC Holdings Plc and Markit Economics Ltd.'s China manufacturing purchasing managers' index due tomorrow.
The main loser on the Sensex was Sesa Sterlite down 4%.
Wipro, SBI, Infosys, and Maruti Suzuki down 1-3% were the other notable losers.
The market breadth was positive on BSE. 1,525 stocks advanced while 1,324 stocks declined.
The rupee was trading at 60.81 after hitting 60.8250, its lowest since March 24 on the back of heavy dollar demand from oil importers.
The unit closed at 60.59/60 on Monday, after posting its biggest single-day loss in more than a month.
Traders expect some consolidation in the pair later in the session. The pair is likely to hold in a 60.50 to 60.90 range for the rest of the session, dealers say.
Most Asian currencies are also trading weaker compared with the dollar.
The Indonesian rupiah led declines among emerging Asian currencies with the dollar holding firm and as worries about liquidity and earnings in China hurt regional stocks.
In Asia, extended weakness in Chinese shares, driven by worries over liquidity and earnings, put a brake on other Asian stock markets on Tuesday despite Wall Street stocks rallying into a fifth session.
Japan's Nikkei share average began the day with a small gain and eventually fell 0.4 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was almost flat, while trading not far from a six-month high hit earlier this month.
The Shanghai Composite Index fell 0.8 percent to around 2,048 points on Tuesday, following a loss of 1.5 percent the previous day.
Chinese stocks have been hit by concerns about a potential share oversupply after the securities regulator released draft prospectuses for 28 new firms planning to list, marking the resumption of initial public offerings after a two-month hiatus.
Taking cues from Wall Street, European markets started higher with Britain's FTSE up 0.9%, Germany's DAX gained 1% and France's CAC added 0.7%.