The market, which opened in green on back of positive macroeconomic data as well as appreciating rupee, soon turned choppy.
The PSU Bank index lost 4.78 per cent, Nifty Bank 1.40 per cent and Private Bank 1.16 per cent after Punjab National Bank detected some fraudulent transactions worth USD 1.77 billion in one of its Mumbai branches.
RBI's tougher norms on recognising stressed assets added to the selling pressure.
Most Asian stocks gained following firm cues from Wall Street, while European markets also rose in opening trade.
The NSE 50-share Nifty lost 38.85 points or 0.37 per cent to close at 10,500.90.
It shuttled between 10,590.55 and 10,456.65 during the session.
It saw an intra-day movement of about 133.90 points.
The market remained closed yesterday for 'Mahashivratri'.
The market breadth, indicating its overall health, was in favour of losers. On the NSE, 848 stocks advanced, 959 declined and 49 remained unchanged.
Total securities that hit their price bands were 261.
Turnover in the cash segment rose to Rs 34,739.18 crore from Rs 30,902.39 crore.
A total of 17,356.48 lakh shares changed hands in 12,426,020 trades. The market capitalisation of listed firms on the NSE stood at Rs 1,46,85,898 crore.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)