The 50-stock NSE barometer Nifty finished 22.50 points, or 0.21 per cent, down at 10,526.20
Broader market outperformed with the S&P BSE Midcap index adding 0.7%, while S&P BSE Smallcap index gained 0.6%.
The Nikkei India Manufacturing PMI dipped from 50.3 in November to 49.1 in December.
The broader NSE Nifty gained 22 points to 10,480.60
The euro climbed 1.3 percent against the yen to 135.60 and added 0.7 percent against the dollar to trade at $1.1115.
Japan will offer more than $8.11 billion in loans to construct India's high speed rail network.
The broader markets also ended lower in line with the benchmark indices
The broader NSE Nifty too fell below the 10,100 level by dropping 100.10 points to end at 10,094.25
The 50-issue NSE Nifty too cracked the 10,200-mark and hit a low of 10,108.55 before finishing 104.75 points, or 1.02 per cent down at 10,121.80.
Muted global trend after a report that US President Donald Trump was preparing to impose more tariffs on China hurt trading sentiments.
Among the gainers, Sun Pharma topped by rising 3.03 per cent as the weak rupee tempted buyers to accumulate shares of pharma exporters.
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ITC, Infosys, Wipro and HDFC Bank among the major losers.
Sun Pharma was by far the biggest gainer in the Sensex pack, surging 8.13 per cent, followed by Dr Reddy's at 4.92 per cent.
The BSE Sensex zoomed 318 points to end at 33,351.57, while the broader Nifty spurted 88 points to 10,242.65.
Broader market outperformed the benchmark indices with S&P BSE Midcap gaining over 1%
Sun Pharma was the best gainer among Sensex components, surging 6.91 per cent
