Oil exploration heavyweights witnessed a correction as soaring crude prices took a pause after the recent rally. Strong rumours that the CPI (M) was withdrawing its support to the Congress-led UPA government too took its toll on the markets during the final hour of the trading session.

Later, however, the CPI (M) scotched the rumours by saying that the alliance was intact. The 30-share Sensex of the Bombay Stock Exchange (BSE) fell by 108 points or 0.64 per cent to close at 16,752.

The broader index CNX S&P Nifty of the National Stock Exchange (NSE) was down 1.09 per cent or 55 points at 4,957. The BSE Oil & Gas index fell by 2.56 per cent.

"Markets are likely to witness some downside as inflation and rising crude prices are major concerns. The depreciating rupee too is adding fuel to the fire," said Anita Gandhi, head of institutional business at Arihant Capital Services Ltd.