Idea Cellular fell as much as 14.57 percent as doubts emerged about Idea's valuations after the merger, according to traders.
The stock plunged to a low of Rs 92 following unconfirmed reports the deal may value the stock at much lower than the current market price.
The Sensex fell over 100 points to 29,503 while the NSE benchmark Nifty shed 0.4 per cent or 35 points to a low of 9,124.
MSCI's broadest index of Asia-Pacific shares outside Japan was fractionally lower. Japan is closed for a holiday.
Indian stock market can raise $100 billion of capital annually going ahead to help meet the country's funding needs, top bourse BSE's CEO Ashish Chauhan has said.
The IPO, the biggest since PNB Housing Finance's Rs 3,000 crore offer in October last year, was subscribed more than 104 times earlier this month.
The latest inflow follows a net investment of Rs 15,862 crore in equity and debt last month.
The bidding for the CL Educate issue will start on March 20 and close on March 22 while Shankara Building Products' IPO will open for public subscription on March 22.
The Reliance Mutual Fund-managed Central Public Sector Enterprises - Exchange Traded Fund (CPSE ETF) saw all round participation from investors, with retail buyers putting in bids of over Rs 3,500 crore.
The rupee had surged to a 16-month high of 65.41 per dollar yesterday after a four-day rally in the currency stoked by the BJP's win in the key state of Uttar Pradesh.
The benchmark Sensex rose as much as 0.81 per cent to 29,824.62, its highest since March 4, 2015 before closing 63.14 points higher at 29,648.99.
Reliance Capital has appointed Ravi Viswanath as proposed CEO of Reliance Health Insurance Ltd.
Analysts said GST would benefit FMCG and transportation companies through a one-size-fits-all national sales tax, which would mean these firms will no longer have to meet tax requirements of different states.
ITC gaining more than 7 per cent a day after the Goods and Services Tax or GST Council approved a proposal to cap cess.
ITC was the top gainer on the Nifty in morning deals, helping the index peek above its important crucial psychological level of 9,200.
Shares of radio operator Music Broadcast were today listed at 26 per cent at Rs 420 to its issue price of Rs 333 on the stock exchanges.
Indian shares have been scaling new highs after the BJP won state assembly elections in Uttar Pradesh with a historic majority.
Tata Steel, Lupin, Adani Ports, Hero MotoCorp, Tata Motors and axis Bank were also among the gainers.
After the Federal Reserve signalled that there will not be pick-up in pace of tightening interest rates going ahead in the US also boosted sentiment in Indian equities and the rupee.
The Sensex closed 187.74 points or 0.64 per cent higher at 29,585.85 and the Nifty50 index settled 68.9 points or 0.76 per cent higher at 9,153.7.