Both the key indices the S&P BSE Sensex and the NSE Nifty50 declined by around 0.20 per cent.
The losses were led by the PSU Banks, telecom players and auto indices.
Index-wise, the S&P BSE Sensex closed at 39,020.39, lower by 38.44 points, or 0.10 per cent, than its previous close of 39,058.83 points. It touched an intra-day high of 39,327.15 and a low of 38,840.76 points.
The Nifty50 on the National Stock Exchange (NSE) also declined and ended the day's trade at 11,582.60, lower by 21.50 points, or 0.19 per cent, than its previous close.
Shares of telecom majors Vodafone Idea and Airtel slumped during the intra-day trade. Shares of Vodafone Idea, slumped 27 per cent to touch a 52-week low of Rs 4.10 per share.
Bharti Airtel's stocks, however, revived the day's lows to end in green. It slumped 9.7 per cent earlier in the day, before reviving to close 3.31 per cent higher at Rs 372.45 per share.
The Supreme Court on Thursday ordered telecom carriers, including Bharti Airtel and Vodafone Idea, to pay the government as much as Rs 92,000 crore in dues, which includes penalties and interest.
A bench headed by Justice Arun Mishra said telecom companies will have to shell out the dues. Department of Telecom (DoT) total demand is estimated around Rs 92,000 crore.
"Markets ended with modest losses on Thursday after a volatile session that saw the Nifty witnessing alternate bouts of buying and selling," said Deepak Jasani, Head, Retail Research, at HDFC Securities.
"The Nifty traded within a range of around 150 points. The Nifty lost 21.5 points or 0.19 per cent to close at 11,582.6."
Broader market indices like the BSE mid-cap index lost more, thereby underperforming the Sensex. Market breadth was negative on both BSE and NSE.
According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private: "Market remained subdued for second day in a row... after the Supreme Court rejected telecom companies' definition of adjusted gross revenue (AGR)."
"PSU Banks index was the worst-performing, given their high exposure to the telecom players. On the other hand, realty was the only sector which closed in green."
( With inputs from IANS )