IndusInd Bank was the top gainer in the Sensex pack, rallying over 7 per cent, followed by SBI, ICICI Bank, HDFC twins, Axis Bank, Bajaj Finserv and UltraTech Cement. NSE Nifty soared 245.35 points to 14,923.15.
On the Sensex chart, IndusInd Bank, Tata Steel, ONGC, ICICI Bank and Kotak Bank were among the top losers.
Investors took the Yes Bank event negatively because it raises a question on the stability of the overall Indian financial system.
The BSE Bank index was the worst performer among key indices with a steep fall of 463.96 points, or nearly 6.5 per cent at 6,749.78.
NSE Nifty ended at 4,113, down 42 points.
The scrip of private airlines, Jet Airways, has been included in the BSE-200 index while that of Polaris Software has been excluded from the IT and Tech index with effect from June 6.
The wider Nifty hit a low of 10,033.35 before finishing at 10,044.10, down 74.15 points or 0.73 per cent.
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.
Banking stocks felt the heat due to worries that the lending rate cuts will hit their bottom line
Shares of rate-sensitive realty, bank and auto sectors were on buyer's radar on Wednesday.
In the 30-share Sensex constituents, 16 ended lower and 14 gained, helping the benchmark indices trim losses.
Overseas investors were one of the heavy buyers.
The 50-share NSE Nifty settled lower by 76.05 points, or 0.88 per cent, at 8,615.25
Profit taking in index heavweights RIL and HDFC weighed on sentiment while ICICI Bank surged 7%.
Out of 30 Sensex shares, 19 ended lower while 11 gained
Two out of three times, the market has delivered positive returns.
Shares of Kotak Mahindra Bank on Friday surged nearly 9 per cent after the private sector lender announced the acquisition of ING Vysya Bank in an all-stock deal valued at Rs 15,000 crore (Rs 150 billion).
The government may delay Rs 14,000 crore (Rs 140 billion) fund infusion in the public sector banks in view of volatile market conditions.
Banks led the decline with Nifty Bank and BSE Bank index dropping over 3% each.
Tata Steel, SBI, L&T and Sun Pharma advanced 2-5% each.