Rise in global crude oil prices, along with outflows of foreign funds and decline in banking stocks, dampened investor sentiments on Thursday and led the Indian equity market to end lower.
Caution also prevailed on account of investors anxiety on Q3 corporate results and more clarity regarding US-China trade talks.
Following Saudi Arabia's announcement of a production cut and report showing that US crude oil inventories decreased during last week sent Brent crude futures above the $61-a-barrel mark around the closing bell.
Index-wise, the NSE Nifty50 declined by 33.55 points or 0.31 per cent to settle at 10,821.60 points.
The BSE S&P Sensex closed at 36,106.50 points, lower by 106.41 points or 0.29 per cent from the previous close of 36,212.91.
It had opened at 36,258 points and touched an intra-day high of 36,269.31 and a low of 36,070.76.
"Markets opened with a negative bias and after a brief pullback into the positive zone, continued to trade under pressure. Both the benchmark closed with losses of over 0.20 per cent," said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
"Global markets traded on a strong clip on reports that the US and China have narrowed differences over trade," he added.
Dey added that minutes from the December's Federal Open Market Committee meeting, which indicated caution on future interest rate hikes helped to buoy sentiment.
In terms of currency, the Indian rupee weakened to Rs 70.54 per dollar, around the closing bell.
The rupee ended the Thursday's trade session at Rs 70.41 to a dollar from its previous close of 70.46.
"Market had a positive expectation on private banks on Q3 results, this conviction was questioned today as banks initiated with higher NPAs," said Geojit Financial Services Head of Research Vinod Nair.
"Investors turned cautious ahead of IT sector earnings while a potential settlement in trade dispute helped oil prices to re-test $60 in the last couple of days, leading to depreciation in the rupee."
Investment-wise, FIIs sold Rs 344.58 crore while DIIs bought stocks worth over Rs 10.98 crore on Thursday.
"Technically, with the Nifty correcting after four sessions of gains, traders will need to watch if the Nifty can now hold above the immediate supports of 10,802; else a further correction is likely." said Deepak Jasani of HDFC Securities.
"A move above 10,866 could result in some more upmove."
Stock-wise, the top gainers on Sensex were Tata Motors, Tata Motors(DVR),NTPC which inched up over 1 per cent. Mahindra & Mahindra, Bajaj Auto rose up to 1 per cent.
In contrast, IndusInd Bank lost 2.15 per cent followed by Kotak Mahindra Bank which lost over 1 per cent. ONGC, Maruti Suzuki and Axis Bank gained in the range of 1 to 2 per cent.
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