The wider NSE Nifty touched a low of 10,652.40 before finishing at 10,671.40, showing a loss of 97.75 points, or 0.91 per cent.
Friendlier government policies, greater demand and better supply of coal have fuelled investor interest.
The session was marked by volatility and stock-specific action, even as the overall sentiment remains risk-averse, brokers said.
The broader NSE Nifty, after cracking below the key 10,300-mark, touched a low of 10,211.25, before finally ending 134.75 points, or 1.30 per cent, down at 10,226.55.
The Congress chief reiterated that Rs 30,000 crore was "wrongfully" given to Anil Ambani in the purchase of Rafale fighter planes.
The NSE Nifty too recovered over 100 points, or 0.96 per cent, to end at 10,576.85.
A declining rupee, elevated crude oil prices and sustained foreign fund outflows added to the gloom
More than 10% (40 of 498 companies) have lost at least half their market value.
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The broader NSE Nifty gained 22 points to 10,480.60
The sentiment got support from better-than-expected earning results by select companies and continuous buying by domestic financial institutions.
The NSE Nifty also moved up by 12 points to 8,648.35.
About 1,556 shares have advanced, 1,211 shares declined, and 182 shares are unchanged.
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The sentiment-driven rally also got support from stock specific earning results and Finance Minister Arun Jaitley's statement that the Centre will step up reforms to attract more investment and fill up infrastructure deficit.
Out of 30 Sensex shares, 19 ended lower while 11 gained
Of the 30-share Sensex, 13 ended higher, while 17 led by Power Grid, Tata Steel, Bajaj Auto, Hero MotoCorp, NTPC, Tata Motors, Dr Reddy's, M&M, GAIL, Infosys and L&T finished lower, fell by up to 2.40 per cent
This was the biggest single-day fall for the benchmark index since August 10 when it had fallen by 310 points.
The 50-issue Nifty fell 29.60 points or 0.34 per cent to close at 8,642.55
Notable losers were ONGC, Axis Bank, ITC, SBI, ICICI Bank, NTPC, Hero Motocorp, Sun Pharma and Bharti Airtel who fell by up to 2.80 per cent.
The broader markets were also in top gear, with the BSE midcap index surging by 2.1% at 11,431 and the smallcap index gaining 1.4% at 11,735.
Markets ended higher for the second straight session mainly on the back of upbeat corporate earnings.
Sensex ended up 190 points at 25,519 and Nifty climbed 57 points to end at 7,626.
The index had risen over 585 points in the previous three sessions.
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Coal industry expert Sunjoy Joshi tells Sheela Bhatt/Rediff.com that the NDA's e-auction of coal blocks will not solve the fundamental problems that dog the industry.
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