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The S&P BSE Sensex ended the day at 26,481.25 down by 41.84 points.

The broader 50-share Nifty closed at 8022.40 down by 21.75 points.

17 of 30 Sensex stocks ended the day in red. Vedanta Ltd was the gainer on Sensex, up over 2%. Cairn India was the top loser on NSE Nifty, down over 4%.

Nestle India was the surprise winner, gaining over 9 per cent in late trade likely on value buying. The stock closed 7.47% up.

The two stocks were in the limegiht after a report in Economic Times suggested that Vedanta was in the final stages to announce its merger with subsidiary Cairn India.

Foreign institutional investors have sold in four of the last five trading sessions, withdrawing about $316 million from Indian cash equities, regulatory and stock exchange data showed.

Overseas funds withdrew a net 57 billion rupees ($889.9 million) from shares last month, when markets were gripped by worries about a potential retrospective minimum alternate tax (MAT).