Benchmark Sensex erased early gains and plunged 216 points in late morning trade, while the Nifty tested the 10,000 level due to sudden selling pressure in realty, oil & gas, power, energy, banking, capital goods and FMCG counters amid lower Asian cues.
The BSE mid-cap and small-cap indices too were down 0.86 per cent and 0.95 per cent, respectively.
The Sensex resumed higher at 32,341.05 and moved in a range of 32,354.77 and 31.915.20 before quoting at 32,057.28 at 1100 hours, down 216.39 points, or 0.67 per cent.
The NSE 50-share Nifty also traded lower by 62.20 points, or 0.62 per cent, to 9,995.20 at 1100 hours.
Major losers were SBI 1.94 per cent, Coal India 1.53 per cent, Kotak Mahindra Bank 1.51 per cent, Dr Reddy's 1.42 per cent, NTPC 1.38 per cent, ITC 1.30 per cent, Power Grid 1.24 per cent and ONGC 1.23 per cent.
However, Tata Steel and HUL rose 3.97 per cent and 1.25 per cent, respectively.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 199.21 crore yesterday, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 308.15 crore.
Overseas, Asian stocks took a breather as investors awaited for more clues on global demand and US interest-rate policy. Modest gains lifted US stocks to another record yesterday.