The broader NSE Nifty ended 0.37 percent lower at 10,500.90.
Back home, SGX Nifty, an early indicator of the Nifty 50's trend in India, signals a strong start for the domestic markets after the benchmark Sensex jumped 294 points to close at 34,300 on Monday. The equity markets were closed on Tuesday.
Metal and IT indices strengthened the market rising 114 points or 0.75% and 98 points or 0.82%, respectively.
The BSE market breadth was however bearish as 1,618 stocks declined as against 1,072 advances.
"Markets corrected on Wednesday thereby resuming the intermediate downtrend", Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.
While latest consumer inflation data, which showed prices in December had eased from a 17-month high failed to have much impact on banks, it is largely seen as positive for lenders who stand to gain from their government bond holdings.
The massive-sell off in the banking sector stocks was triggered after the Reserve Bank of India's (RBI) announced new norms to deal with the NPAs on Monday.
Nifty PSU Bank was down over 1 per cent, while Nifty Bank settled in green.
The management tried to assuage investor concerns a day after the state-owned bank said that it had detected some fraudulent and unauthorised transactions worth about Rs 1.13 trillion ($1,771.69 million) at one of its branches in Mumbai.