The market breadth ended weak on the BSE with 2,086 shares declining and 893 shares advancing.
Shares of rate sensitive sectors such as realty, infrastructure, banking and automobiles ended higher ahead of the Reserve Bank of India (RBI) mid-quarter policy review on June 17.
It is pegged at 6.8-8% by various economists, as compared to 6.7%.
The 30-share Sensex ended down 35 points at 26,349 and the 50-share Nifty ended down 20 points at 7,864.
The muted CPI inflation print at 5% earlier this week, followed by a similar WPI number released Wednesday, seems to have spurred India's central bank into action, is how the economists are reading into Reserve Bank of India governor Raghuram Rajan's 25 basis point cut in repo rate.
The govt would also be coming out with more measures to deal with inflation.
Addressing bankers and economists at Bancon 2013, a flagship event of the Indian Banks' Association, Chidambaram told the lenders to deal firmly with wilful defaulters, but handhold those who are reeling under the impact of the economic slowdown.
He said the UPA had left the economy in a dire state, with Consumer Price Index and food inflation at double digit, Wholesale Price Index inflation around 6-7 per cent and growth prospects were limited.
Finance Minister Arun Jaitley said the inflation index would determine the nominal growth figure, and it is better to set modest targets and outperform them.
Chief economic advisor Arvind Subramanian discusses the Budget, goods and services tax, Centre-state relationship and larger issues facing the economy
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