The Bombay Stock Exchange bellwether Sensex swung in a 1,115-point range, initially rising by 591 points and later falling by 524 points from the last closing levels on alternate bouts of buying and selling from investors.

Market players said the market failed to get any impact of strong global cues even as investors faced a liquidity crunch due to their commitments in the primary market, which absorbed a large chunk of money in the last couple of weeks.

The Rs 11,000-crore mega IPO of Reliance Power, which was oversubscribed 73 times, absorbed a major portion of funds. Many investors subscribed to the offer, but later reportedly placed stop-payment requests with banks after the two-day stocks carnage on January 21 and 22.

The Sensex ended the day at 17,221.74 from previous close of 17,594.07, a net fall of 372.33 points, or 2.12 per cent.

Touching the intra-day high of 18,185.10 points at the outset, the BSE 30-share index later fell sharply to a low of 17,070.05 points

The broader S&P CNX Nifty of the National Stock Exchange also dropped 169.95 ponts, or 3.27 per cent, to close at 5,033.45 from its last close of 5,203.40.

Sustained FII pullout from the equity market was the prime concern for investors. As per provisional data, Foreign Institutional Investors (FIIs) made net sales of Rs 3,021 crore on Wednesday taking the outflows to Rs 13,524 crore in the last six days.

They, however, were net buyers to the tune of Rs 4,040 crore in the Futures & Options segment on the same day.

Analysts said the overnight rally was expected due to the market's oversold position but another sharp fall to bottom out from the 200-day moving average is not ruled out,

They placed trading supports at 16,975-16,350 for Sensex and 5,000-4,780 for Nifty as well as the upper targets at 18,270 and 5400-5630.

The Dow Jones Industrial Average on Wednesday ended 300 points higher. Asian indices followed suit rising by about 0.3 to 2.23 per cent. Only, the Hang Seng fell by 2.29 per cent.

European markets also traded strong in early trade.

The market breadth was highly negative as 2,341 shares gained against only 384 lost ground at close on BSE.

The trading volume declined further to Rs 6,379.33 crore from Rs 7,133.45 crore on Wednesday. RNRL remained the top traded securities with the highest turnover of Rs 407.92 crore followed by RIL (Rs 313.64 crore), RPL (Rs 304.3 crore), REL (Rs 175.25 crore) and Reliance Capital (Rs 169.88 crore).

The broad-based BSE-100 index fell back by 269.96 points to 9,188.84 from previous close of 9,458.80.