Markets snapped the four-day winning streak with the benchmark Sensex dropping 121 points on profit-selling by funds in bluechip shares, particularly IT stocks.
After surging over 300 points in the previous four sessions, the 30-share Sensex of the Bombay Stock Exchange fell 121.18 points to 17,590.17.
The wide-based National Stock Exchange index Nifty lost 40.40 points to 5,262.45.
Brokers said IT stocks attracted profit-booking as rupee rose to an 18-month high of 44.97 against the dollar.
They said investors feared profitability of IT companies taking a hit because of the relentless appreciation of the rupee.
Software exporters earn a hefty portion of their revenues from exports to the US and are susceptible to fluctuation in the value of the domestic currency.
The local currency has been on a gaining spree amid sustained capital inflows, which saw the benchmark Sensex gaining 300 points to touch a two-year high yesterday.
Profit-booking even discounted positive factors such as a firming trend in the global markets.
In the 30 share BSE index, 19 shares declined while 11 ended in the positive zone.
IT major Infosys lost Rs. 71.75 to Rs. 2,643.90. The IT sector index suffered the most by losing 2.19 per cent to 5,300.13.