Falling for third day, Sensex on Thursday slid about 62 points to end at 26,995.87, its weakest level in nearly two weeks, on caution due to lingering worries over early Fed rate hikes and after US President Barack Obama promised to destroy militants in oil producers Syria and Iraq.
A heavy sell-off mainly in Sun Pharma, ONGC and Coal India led the BSE benchmark to end below 27,000-mark.
In three straight sessions, Sensex has now lost nearly 324 points after hitting record highs on Monday.
Similarly, the broader 50-issue CNX Nifty of the NSE eased 8.40 points, or 0.10 per cent, to 8,085.70 -- its lowest close since 8,083.05 on September 2. Jittery global markets, already spooked by earlier than expected US Fed interest rate hike talk, became nervous after Obama's vow.
The US President on Thursday promised to "degrade and ultimately destroy" the Islamic State (IS) as he announced a major expansion of the military campaign, including American airstrikes in Syria and deployment of 475 more military advisers to Iraq, to achieve this goal.
Weak Asian as well as European cues ahead of US jobless claims data and China's subdued inflation last month too weighed negatively on domestic sentiment, brokers said.
Leading the laggards in 30-share Sensex, Sun Pharma tanked 4.3 per cent down on reports of a surprise inspection by US drug regulator at its Halol plant in Gujarat. Coal India shares fell 3.53 per cent on speculation government will sell a portion of shares at a discount to market price.
On Wednesday, CCEA cleared stake dilution in Coal India, ONGC and NHPC via OFS route. ONGC slid 3.58 per cent.
Overall, 16 Sensex stocks declined while 14 led by SBI, Infosys, RIL, Axis Bank, BHEL, GAIL and Maruti ended up. The Indian market is now looking forward to a bunch of macroeconomic data --CPI, WPI and industrial production-- to be announced tomorrow and early next week for further cues.
The rupee, however, appeared to be rebounding from 1-month lows of 60.95 against US dollar and was last trading at 60.77 levels on good selling of the greenback.