The benchmark S&P BSE Sensex pared initial gains to drop 130.97 points on sustained selling pressure in metal, banking, capital goods, FMCG and auto sectors amid cautiousness following slowdown in foreign institutional inflows.
The Sensex opened higher at 22,654.28 and advanced further to 22,681.89 before declining to 22,470.43.
It was quoting at 22,500.64 at 1005 hrs, showing a loss of 130.97 points, or 0.58 per cent, from its last close.
The NSE 50-share Nifty also fell 38.15 points, or 0.56 per cent, to 6,723.15 at 1005 hrs in early trade.
Major losers were Tata Steel (3.22 per cent), Hindalco (1.95 per cent), ICICI Bank (1.36 per cent), Bajaj Auto (1.27 per cent) and HDFC Bank (1.22 per cent).
Foreign institutional investors (FIIs) bought shares worth a net Rs 77.02 crore yesterday, as per provisional data from the stock exchanges.
Asian stocks were trading mixed as investors weighed corporate earnings.
Key benchmark indices in Taiwan, China, Hong Kong rose by 0.16-0.54 per cent while indices in Indonesia, South Korea and Singapore were down 0.09-0.38 per cent.