Forex traders said the Indian rupee gained ground on the back of stable crude oil prices and a weaker dollar index.
BSE Sensex closed 247.55 points or 0.61 per cent lower at 40,239.88.
The 30-share index was trading 33.67 points or 0.08 per cent lower at 40,453.76 in morning trade.
Forex traders said investors were optimistic about the US-China trade talks.
Sectorally it was a mixed bag with auto leading the pack with gains of 0.8 per cent, followed by metals, oil and gas and energy.
However, silver prices rose Rs 46 to Rs 44,691 per kg from Rs 44,645 per kg in the previous trade.
The 30-share BSE Sensex stabilised in afternoon trade and settled with gains of 42.28 points or 0.10 per cent at 40,487.43.
Marketmen said the fall in crude oil futures was mostly due to trimming of positions by traders in tandem with a weak trend overseas.
The market will be looking forward to the release of industrial production, retail and wholesale inflation figures this week.
The US Federal Reserve interest rate decision on Thursday will be a major event that would be keenly tracked by markets globally.