Geo-political concerns over death of a Saudi journalist, Brexit and likely breach in Italy's budget also kept investors cautious.
Small- and mid-cap stocks continued facing selling pressure due to stretched valuations.
The second half of June could be driven more or less by technical factors triggered by news flow from Greece, the US Federal Reserve and the monsoon. The technical picture seems bearish as of now, says Devangshu Datta.
Sun Pharma was the biggest gainer in the Sensex pack, advancing 1.79 per cent.
The benchmark Sensex gained 4,642.84 points, or 16.%, while the broader NSE Nifty surged 1,572.85 points, or 18.20% during this period.
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.
The NSE Nifty cracked below the 10,800-mark to hit a low of 10,753.05 intra-day, before closing at 10,762.45 with a loss of 59.40 points, or 0.55 per cent.
'It is easy to dramatise the events of today, but it is far more important to focus on the fact that we have a radically overvalued financial sector. It is a house of cards.'
The NSE Nifty, which dipped below the key 10,800-mark to touch a low of 10,755.40, bounced back on late buying to close at 10,817.70, up 9.65 points, or 0.09 per cent.
MF investors may not be able to support markets fall if selling intensifies
The 50-share NSE Nifty too closed down 168.30 points, or 1.58 per cent, at 10,498.25 -- a level last seen on January 3 when it closed at 10,443.20.
The broader NSE Nifty too reclaimed the key 11,500-mark. It touched a high of 11,562.25, before finally settling at 11,536.90, showing a gain of 59.95 points, or 0.52 per cent.
The Sensex has now lost 878.32 points in six sessions -- its longest string of losses in six months.
This is its biggest single session fall since August 24, 2015, when it had lost 1,624.51 points.
Sentiments took a hit after broader Asian markets weakened, following a renewed sell-off on Wall Street on Tuesday as energy shares dropped after crude oil prices plunged to a 13-month low amid weak earnings and US-China trade disputes, fuelling worries about economic growth
The session was marked by volatility and stock-specific action, even as the overall sentiment remains risk-averse, brokers said.
Traders said falling crude prices in the global market was a big boost for the economy as it lightens the country's import bill burden, eases inflation and current account deficit concerns.
The broader NSE Nifty slipped below the 10,500-mark by falling 103 points, or 0.97 per cent, at 10,482.20. It touched a high of 10,645.50 and a low of 10,464.05 during the day.
The broader Nifty ended on top of 9,800 again.
Both the indices ended at their highest levels since February 1.
The broader NSE Nifty moved between 10,705 and 10,785.55, before ending 25.15 points, or 0.23 per cent down at 10,716.55.
The broader NSE Nifty index too finished lower by 4.80 points, or 0.05 per cent, at 10,632.20.
SBI had a bad day, sliding the most by 5.36%. Others that dragged the key indices down were M&M, Reliance Industries and L&T.
The NSE Nifty after shuttling between 10,441.90 and 10,341.90, ended 6.15 points, or 0.06 per cent down at 10,380.45.
Sentiment was hurt after market regulator Sebi directed bourses to initiate action against 331 suspected shell companies.
Investors booked profits in recent gainers
The derivatives expiry on Thursday is also expected to add to the volatility.
It was the second straight week of gains for the benchmarks.
The May Nifty option chain and the three-month Nifty chains offer several signals worth noting.
Maruti Suzuki was the biggest gainer among Sensex scrips, rising 5.89 per cent, followed by M&M up 5.29 per cent.
Independent market analyst Ambareesh Baliga points out the red flags that retail investors should not have ignored and lists three scenarios -two of these scenarios offer a glimmer of hope to retail shareholders of Yes Bank - that could play out in the coming days.
The broader NSE Nifty too dived by 101.65 points, or 0.97 per cent, to close at 10,350.15.
Broader market outperformed the frontline indices with the Smallcap and Midcap gaining up to 1%
Sentiment was largely positive after April IIP grew at 4.9 per cent, spurred by higher growth in manufacturing and mining sectors.
The Nifty rose 176.50 points, or 1.74 per cent, during the week.
Coal India topped the losers' list in the Sensex pack on Tuesday, falling 2.36 per cent, followed by Bharti Airtel at 2.16 per cent.
The 50-share NSE Nifty ended up 37.05 points, or 0.36 per cent, at 10,397.45 points
But the 30-share Sensex rose by 141.52 points, or 0.41 per cent, to close at 34,297.47. The broader NSE Nifty gained 44.60- points, or 0.42 per cent, to end at 10,545.50 after touching a high of 10,618.10.
Despite a strong start to trade today, key benchmark indices retreated sharply from their higher levels following bouts of profit-taking amid fresh weakness in the rupee against the dollar.
Construction major L&T was the biggest gainer among the Sensex components, spurting 2.30 per cent, after the company said its board has approved a Rs 9,000-crore share buyback plan.
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