The 30-share index resumed higher at 29,134.93 and touched a high of 29,183.76, showing a rise of 253.35 points, or 0.86 per cent, on the back of passage of Insurance Bill in Parliament late yesterday.
Later, it succumbed to heavy selling to hit a low of 28,809.07.
The NSE Nifty also fell by 38.20 points, or 0.44 per cent, to quote at 8,737.80.
Major losers were Axis Bank, Hindalco, Sun Pharma, BHEL, Bajaj Auto, Larsen, GAIL and Tata Steel.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 733.09 crore yesterday, as per provisional data released by the stock exchanges.
Key indices in China, Hong Kong, Taiwan, South Korea and Japan rose by 0.25-1.44 per cent, while indices in Singapore and Indonesia fell by 0.09-0.27 per cent.
At the New York market, US stocks recorded one of the biggest gains in more than a month, bouncing back from two days of losses, as expectations of a rate hike were pushed back following disappointing retail sales data.