The BSE Sensex fell 0.12 percent, with financial stocks leading the losses, in choppy trade during a special trading session on Saturday that saw low institutional participation.
It was a day of low volumes and institutional participation is also less as most of them are on leave, said Jagannadham Thununguntla, head of research at SMC Global. There has been some company-specific movement in stocks, but overall participation was low, he added.
Traders said fertiliser stocks got a boost after news channel ET NOW cited the junior minister for fertiliser as saying that the government would unveil a plan to help urea manufacturers and boost investment in the urea industry.
State-run Rashtriya Chemicals & Fertilisers (RSTC.NS) jumped 16 percent after the minister's comments. Chambal Fertilisers (CHMB.NS) and Tata Chemicals (TTCH.NS) also rose 6.4 percent and 3 percent.
The main 30-share BSE index ended 19 points lower at 15,848.80, with half of its components ending in the red.
The index, which fell nearly a quarter in 2011, rose about 2.5 percent this week.
State Bank of India, ICICI Bank (ICBK.NS) and HDFC Bank (HDBK.NS) fell 0.2 to 0.9 percent during the session.
The BSE banking index fell 0.33 percent on Saturday, after rising more than 6 percent in the past five sessions.
Engineering conglomerate Jaiprakash Associates (JAIA.NS) fell about 2.5 percent after the Securities and Exchange Board of India (SEBI), the country's capital market regulator, fined top executives, including its chairman, for insider trading in the company's stocks in 2008.
The executives have denied the charges and plan to appeal against the ruling.
Airlines rose after the Economic Times reported the civil aviation ministry is likely to drop its opposition to higher investment by foreign airlines in domestic carriers, a move that would come as a lifeline to India's struggling airlines.
Jet Airways (JET.NS) ended up 3.5 percent while budget airline SpiceJet (SPJT.BO) rose 4.27 percent. Ailing Kingfisher Airlines (KING.NS) reversed early losses to end up 0.26 percent.
The broader 50-share NSE index ended 0.15 percent lower at 4,746.90. In the broader market, there were 2.5 gainers for every loser on relatively low volume of 90.45 million shares.
The stock markets were open for one-and-a-half hours on Saturday because the National Stock Exchange was upgrading its futures and options trading system infrastructure to improve processing capability and handle increased activities.
Traders said healthy inflation data, expected later this month, could act as a trigger for the equity market.
The market is looking for some breakout on the upside and probably this trigger will come from inflation numbers, said Kishor Ostwal, Chairman at CNI Research.
Data on Thursday showed the food price index declined for the first time in nearly six years, raising hopes the December headline inflation rate would drop below 9 percent for the first time in more than a year.