The Sensex and Nifty ended lower to post their first drop in four sessions, as investors booked profits in recent outperformers such as ICICI Bank Ltd and HDFC Bank Ltd after the central bank cut rates on Tuesday .
Investor sentiment was also dampened as Nikkei India Services Business Activity Index eased to 52 in September from 54.7 in August.
The 30-share BSE index Sensex ended lower by 113.57 points or 0.4 per cent at 28,220.98 and the 50-share NSE index Nifty closed down 25.2 points or 0.29 per cent at 8,743.95.
Among BSE sectoral indices, banking index fell the most by 0.78 per cent, IT 0.56 per cent, TECk 0.38 per cent and healthcare 0.34 per cent. On the other hand, realty index was the star performer and was up 1.69 per cent, metal 0.69 per cent, auto 0.35 per cent and FMCG 0.29 per cent.
The Nifty Bank Index closed 0.69 per cent lower, after gaining 2.55 per cent in the last three sessions.
Top five Sensex gainers were Tata Motors (+1.59%), Asian Paints (+1.39%), HUL (+1.32%), ITC (+0.63%) and State Bank of India (+0.5%), while the major losers were ONGC (-2.56%), Axis Bank (-2.03%), Bajaj Auto (-1.28%), Hero MotoCorp (-1.17%) and M&M (-1.16%).
European shares fell on Wednesday on concerns the European Central Bank might reduce the pace of bond buying before its purchase programme ends, hitting utilities and real estate stocks hardest.
Asian shares and gold retreated on Wednesday and bond yields were near two-week highs as markets were rattled by a media report flagging the possible withdrawal of the European Central Bank's bond buying programme.
US equities ended lower after rumours did round in the market that Federal Reserve's November meeting could go live when it comes to interest rate decision.