The Sensex rose more than 500 points early on hopes of progress in the India-US trade talks.
The gains faded and the Sensex closed 143.21 points lower at 73,709.69.
Brent crude rose to 110.15 dollars a barrel, raising concerns about import costs and inflation.
Foreign investors continued to sell.
IT stocks were the exception, with the Nifty IT index up 2.52%.
The Nifty 50 fell 77.60 points, or 0.34%, to settle at 22,811.35, according to the same report.
Both indices had gained early on optimism over India-US trade negotiations, according to Free Press Journal.
Sunday Guardian Live reported that the Sensex was up more than 500 points at one stage in early trade, with the Nifty near 23,000.
The Nifty IT index rose 2.52% and was the only major sectoral gainer, according to Free Press Journal.
The Nifty Auto index fell 1.99%, Nifty Metal fell 1.97%, Nifty Realty fell 1.57%, Nifty Media fell 1.24% and Nifty Private Bank fell 1.16%, according to the same report.
Liquide reported that the Bank Nifty fell 0.92% to 54,976.90.
Brent crude rose 1.31% to 110.15 dollars a barrel, according to Free Press Journal.
Higher crude prices raised concerns about India’s import costs, inflation, corporate profit margins and rupee volatility, according to the same report.
Continued selling by foreign institutional investors weighed on sentiment, according to Free Press Journal.
Vinod Nair of Geojit Investments said high crude and foreign investor selling outweighed the trade news, while improving second-quarter earnings and buying by domestic institutions provided support.
Vikram Kasat of PL Capital said elevated crude prices could keep markets volatile.
These are the views of the analysts quoted and are not forecasts by this website.
Twenty-four carat gold fell 0.49% to Rs 1,45,803 per 10 grams and silver fell 1.15% to Rs 2,09,061 per kilogram, according to Free Press Journal.
Dalal Street, Mumbai (file image), Wikimedia Commons, CC BY-SA 3.0
