Markets have erased early gains and have entered into negative territory led by selling pressure among auto, power and capital goods shares.
By 1430, Sensex fell by 11 points at 19,873, and the Nifty down 8 points at 5,686 levels.
On the global front, Asian shares inched higher and the dollar steadied, as a pick-up in Chinese factory activity and a commitment by the U.S. Federal Reserve to its aggressive stimulus stance soothed sentiment rattled by wrangling over a bailout plan for Cyprus.
The HSBC Purchasing Managers' Index for China revived to 51.7 in March from 50.4 in February, pointing towards solid but not spectacular first-quarter growth in the world's second-largest economy.
The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1%. Hong Kong shares gave up earlier gains to trade nearly flat while Shanghai shares .entered positive territory to add 0.4% after the China PMI.
Japan's Nikkei stock average climbed 1.3%, hitting a 4-1/2-year high as exporters gained on the Fed's continued stimulative stance and expectations of further monetary easing by the Bank of Japan.
Back home, on the political front, President Pranab Mukherjee today accepted the resignation of five Ministers belonging to DMK, which withdrew support to the UPA government on the Sri Lankan Tamils issue.
On the sectoral front, BSE Auto, Power, Realty and Capital Goods indices have plunged by almost 2% each. However, BSE Consumer Durable index has surged over 2%.
From the Auto space, Tata Motors has dipped over 4% on the back of heavy volumes on the bourses. Maruti Suzuki, Bajaj Auto and Hero Moto have declined between 1-3%.
Mirroring problems in the power sector, the electrical and electronics industry has registered a fall in its revenue for the third consecutive quarter in FY13. The industry saw a 10.5% fall during the quarter ending December 2012 compared to the corresponding period of FY12. Power related shares like Tata Power and NTPC have slipped between 2-3%.
From the Capital Goods segment, L&T and BHEL have fallen between 1-2%.
Other notable losers are HDFC Bank, HUL, ONGC, Cipla, Hindalco and Sun Pharma.
On the gaining side, Bharti Airtel has surged almost over 6%, recovering almost all its losses made in past two days on the bourses. Shares of telecom services provider had dipped 9% in past two trading session to Rs 281 from Rs 308 after a Delhi special court summoned the Bharti's chairman Sunil Mittal pertaining to its allegation over the allocation of additional spectrum in 2002.
Among other shares, Ingersoll Rand (India) has rallied 9% to Rs 423 in noon deals after the company inaugurated its greenfield manufacturing facility at the Mahindra World City, Chennai, yesterday.
Meanwhile, BSE Midcap and Smallcap indices have slipped between 0.3-0.4%. The market breadth in BSE remains unhealthy with 1,713 shares declining and 1627 shares advancing.