The Sensex languished on global cues throughout the morning.
However, it staged a partial comeback and touched a high of 16,878.
Selling pressure in Larsen & Toubro and Reliance dragged the index once again to a low of 16,642.
The Sensex finally ended down 107 points at 16,776. Nifty ended down 38 points at 5,030.
Asian markets ended lower on sustained worries of the Euro-zone debt crisis. Italy's benchmark sovereign yield was above the key 7% level.
The Bank of Japan cut its economic outlook on Wednesday, citing weaker global conditions, while voting unanimously to keep its interest-rate target at 0-0.1%, as expected.
Nikkei slumped 1% to 8,463. Hang Seng and Shanghai Composite dropped over 2% each. Markets in Seoul and Taiwan were also in red.
Meanwhile, India's services exports fell by 5.6% year-on-year to $11.22 billion in September, according to the Reserve Bank of India.
The country's total receipts from services exported stood at $11.89 billion in August, RBI data said. Moreover, Export Promotion Council for EOUs and SEZs (EPCES) data showed that exports from special economic zones (SEZs) grew 26.2% year-on-year to Rs 1.76 lakh crore during April-September this fiscal.
In other news, the cabinet has approved foreign direct investment of up to 26% in the pension sector, a government source told Reuters on Wednesday.
Capital goods index slipped 3.8% at 9,812 as more companies came out with muted corporate earnings. The index earlier slipped to a 30-month low of 9,712.
The slowdown in order inflow dragged down the capital goods stocks such as Bharat Heavy Electrical, Larsen and Toubro (L&T), Punj Lloyd, Suzlon Energy, Thermax and Crompton Greaves, which plunged more than 5%
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