Mumbai: The Sensex wiped off all its gains Wednesday and fell marginally to end in the red at 26,211 as cautious investors took profit ahead of the monthly futures and options (F&O) contract expiry amid a mixed trend overseas.
Besides, the rupee gave up 18 paise against the dollar at 68.24, which clouded sentiment. Strengthening oil prices too dimmed some of the lure of equities.
Volumes were thin during the session as most foreign investors are away on a vacation in a year-end holiday season and other participants chose not to create more bets.
Covering-up of short positions added to the momentum at the outset, but selling to book year-end profits in the later part of the session ahead of the December derivatives expiry on Thursday -- this year's last -- took away the day's gains completely.
The 30-share Sensex opened higher at 26,243.19 and advanced to hit a high of 26,415.05. But emergence of selling in the last one hour of trading pushed the benchmark into the negative zone, which settled marginally lower by 2.76 points, or 0.01 percent, at 26,210.68.
Yesterday, the barometer had gained 406.34 points.
In contrast, the 50-share NSE Nifty managed to close in the positive zone with a rise of 2 points, or 0.02 percent, at 8,034.85. Intra-day, it hovered between 8,100.55 and 8,028.40.
Domestic institutional investors (DIIs) net bought shares worth Rs 1,502.41 crore yesterday while FPIs sold shares of Rs 712.17 crore.
"Short covering ahead of expiry is adding to volatility. However, the general sentiment is weak due to rising oil price and weakening of rupee," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Oil major Reliance Industries emerged as the big loser by plunging 1.15 percent, followed by Tata Steel falling 1.13 percent. Hero MotoCorp, Tata Motors, ICICI Bank, PowerGrid and SBI fell too.
Outperforming Sensex, the broader markets continued to show a positive trend as investors went about raising their bets at select counters, available at an attractive lower levels. BSE small-cap and mid-cap ended 0.87 percent and 0.53 percent higher, respectively.
Elsewhere, Asian stocks ended mixed as Shanghai Composite fell 0.40 percent and Japan's Nikkei 0.01 percent, but Hong Kong's Hang Seng edged higher 0.83 percent. Europe too was in a mixed form in their late morning trade.
Key indices such as Paris fell 0.03 percent while London FTSE rose 0.23 percent. Frankfurt rose 0.22 percent.
In the domestic market, 14 scrips ended in the red out of the 30-share Sensex pack while 13 led by Coal India, Wipro, Dr Reddy's, Lupin, M&M, ITC, Axis Bank, Adani Ports and HUL closed in the green and contained the fall.
Speaking sectorally, oil and gas fell 0.27 percent, capital goods 0.09 percent and metal 0.07 percent. Healthcare rose 0.82 percent, FMCG 0.61 percent and IT 0.22 percent.