Heightening global tensions washed out early gains as both the key indices - BSE Sensex and NSE Nifty - ended lower for the second consecutive week due to selling after mid-week on the back of RBI leaving interest rates unchanged for the third straight time in policy review.
Worsening geopolitical worries after US President Barack Obama authorised targeted air strikes in Northern Iraq weighed on the global markets, ultimately affecting the local bourses.
Russian President Vladimir Putin went on retaliatory measures by banning food imports from western countries despite sanctions imposed by the US and European countries, which also affected the market sentiment.
Unrest in Libya and resumption of conflict between Israel and Palestinian militants, too, weighed on the market.
The sentiment was also hit by the rupee slumping to five- month low of 61.74 (intra-day) against the US dollar with global crude prices shooting up due to global instability.
Investors also turned cautious after the Reserve Bank (RBI) Governor Raghuram Rajan warned that global markets are at the risk of a crash due to the lingering competitive loose monetary policies being followed by the developed economies.
The BSE S&P Sensex resumed higher at 25,631.68 and firmed up further to 25,928.32 on initial buying as investors cheered RBI Governor Raghuram Rajan's move to give more funds to banks for lending by slashing statutory liquidity ratio (SLE) by 50 basis points even as he left policy rates unchanged for the third straight time.
However, it fell sharply to 25,232.82 before ending the week at more-than three-week low at 25,329.14, showing a loss of 151.70 points or 0.60 per cent.
It has dropped 797.61 points of 3.05 points during the two weeks.
The NSE 50-share Nifty also moved down by 34.05 points or 0.45 per cent to finish at 7,568.55. It has dropped by 222.10 points of 2.85 per cent during the two weeks.
Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 2,217.01 crore during the week as per SEBI's record, including the provisional figure of August 8.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said, "Equity markets had a firm start in the week but when the RBI Policy was announced it managed to close in green on Tuesday. Then it started falling back with the global concern of Ukraine, Iran and the virus threat. FII were observed in the selling position on last