Benchmark Sensex declined by 359 points while Nifty closed below the 21,400 level on Thursday due to selling in IT shares and continuous foreign fund outflows.

The 30-share BSE Sensex fell by 359.64 points or 0.51 per cent to settle at 70,700.67. The index opened lower and plunged further 741.27 points or 1.04 per cent to hit a low of 70,319.04 in day trade. As many as 19 Sensex shares dropped while 11 advanced.

The broader Nifty fell by 101.35 points or 0.47 per cent to settle at 21,352.60 with 34 of its constituents closing in the red.

A rise in US bond yields and mixed financial results by corporates triggered FII selling, analysts said. IT, pharma and FMCG shares declined while realty and energy stocks bucked the trend.

Among Sensex shares, Tech Mahindra fell by over 6 per cent after the company reported a 60 per cent decline in net profit to Rs 510.4 crore in the December quarter.

Bharti Airtel, ITC, Asian Paints, HDFC Bank, Nestle, Tata Steel, and Maruti were among the other major laggards.

IT shares declined as third-quarter results have failed to impress investors. Wipro dropped 1.68 per cent, HCL Tech by 1.54 per cent, TCS by 1.03 per cent and Infosys by 0.22 per cent.

NTPC, ICICI Bank, IndusInd Bank, Reliance Industries, JSW Steel, Bajaj Finance, Bajaj Finserv and Mahindra & Mahindra were among the gainers.

"The benchmark indices closed on a negative note taking cues from the global market as the positive upside coming from the US economy delayed the optimism of a rate cut," said Vinod Nair, Head of Research, Geojit Financial Services.

"FIIs are in a selling mode as the yields on US benchmark bonds rise. The broader market is unable to hold gains as concerns of high valuations, sub-par results, and persisting geopolitical tension in the Middle East, followed by an F&O expiry, are weighing down the market," Nair added.

In the broader market, the BSE midcap gauge declined 0.36 per cent while smallcap index climbed 0.54 per cent.

Among the indices, teck fell by 1.39 per cent, IT declined 1.23 per cent, telecommunication (1.21 per cent), FMCG (1.01 per cent) and bankex (0.58 per cent).

Utilities, power, services, commodities and realty were the gainers.

Markets will remain closed on Friday for Republic Day.

On the weekly front, the BSE benchmark fell by 982.56 points or 1.37 per cent, and the Nifty declined 269.8 points or 1.24 per cent.

"The prevailing pressure in banking majors is largely weighing on the sentiments however selective buying in others is capping the damage so far," Ajit Mishra, SVP - Technical Research, Religare Broking Ltd said.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled in the positive territory.

European markets were trading mostly lower. The US markets ended on a mixed note on Wednesday.

Foreign institutional investors (FIIs) offloaded equities worth Rs 6,934.93 crore on Wednesday, according to exchange data.

Global oil benchmark Brent crude climbed 1.02 per cent to USD 80.96 a barrel.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.