The BSE Sensex closed 247.68 points or 0.62 per cent lower at 39,502.05 from its Tuesday's close of 39,749.73. The Nifty finished the trading session 67.65 points or 0.57 per cent down at 11,861.10 points.
"Nifty lost some ground after testing 11,950-12,00 odd levels. It now continues to consolidate in the range of 11,700-12,000. Broader market health has improved indicating an underlying positive bias," Sahaj Agrawal, Head of Derivatives - Kotak Securities, said.
"We expect the index to stage a breakout and test 12,200-12,400 levels after some consolidation. On the downside, support is seen at 11,700 below which there could be a meaningful correction. Cement and Financial services trade with positive bias," he added.
The State Bank of India lost the most during the Wednesday's trade, down 3.29 per cent. Punjab National Bank also slipped over 5.2 per cent lower following its poor Q4 results.
Among the other major losers on the BSE were Tata Steel, Tata Motors (DVR), ICICI Bank and Maruti Suzuki. Sun Pharma, TCS, HCL Tech, Power Grid and Hidustan Uniliver finished higher.
Globally, bond yields in the global and domestic market are retracing, said Vinod Nair, Head of Research, Geojit Financial Services. The 10-year yield in US slid to 2.2 per cent, 20 basis points (bps) down in the last one week, he added.
"A similar trend is visible in domestic market also, which is eagerly waiting the new government's oath taking ceremony," Nair said.
( With inputs from IANS )