Benchmark equity indices Sensex and Nifty reversed their early gains to close lower on Wednesday due to selling in oil & gas, banking and IT stocks amid weak trends in European markets.

The 30-share BSE Sensex declined by 372.46 points or 0.69 per cent to close at 53,514.15, extending its falling streak to a third day.

The index opened higher and touched the day's high of 54,211.22 amid gains in Asian markets. However, it failed to hold onto its gains and dropped over 750 points to touch a low of 53,455.26 as European markets opened lower.

The broader NSE Nifty declined 91.65 points or 0.57 per cent to settle below the 16,000 level at 15,966.65.

Among the Sensex constituents, IndusInd Bank, HDFC, Bharti Airtel, HDFC Bank, Reliance Industries, TCS, Titan and HCL Technologies were the major laggards.

Hindustan Unilever, Asian Paints, Sun Pharma, Kotak Mahindra Bank, NTPC and Nestle were the major gainers.

"Strong domestic macro numbers and a fall in crude prices lifted Indian indices to open in positive territory while the gains were restrained by Europe's negative market trend.

"Global markets were in a bear grip ahead of the release of the US inflation data...," said Vinod Nair, Head of Research at Geojit Financial Services.

In Asia, markets in Shanghai, Seoul and Tokyo ended higher, while Hong Kong settled marginally lower.

Stock markets in Europe were trading lower in mid-session deals.

The US markets had ended lower on Tuesday.

Official data released on Tuesday showed that retail inflation eased slightly to 7.01 per cent in June but was above the central bank's tolerance band for the sixth month in a row, signalling more interest rate hikes in future. In May, retail inflation was 7.04 per cent.

Meanwhile, international oil benchmark Brent crude climbed 1 per cent to USD 100.5 per barrel.

Foreign institutional investors remained net sellers on Tuesday as they offloaded shares worth Rs 1,565.68 crore, according to exchange data.