The Sensex dipped 2.7 per cent to close at a three-month low of 16,022 points on Tuesday. The index briefly slipped below the 16,000 mark during the day on the European Union’s warning of weak economic growth unless major reform initiatives are taken up by governments.
The broader Nifty at the National Stock Exchange, too, fell by 2.8 per cent to close at 4,806.8, on a day when all Asian and European markets shed heavily.
While the premier indices in Hong Kong, Taiwan and Japan lost between 3 and 3.5 per cent on Tuesday, their European counterparts shed between 2.5 and 3.5 per cent.
The crisis in Europe, which initially seemed limited to Greece, has grown in magnitude and dampened sentiments worldwide. While a bank in Spain announced huge losses, geopolitical risks are emerging in Korea.
“Stability is something that can’t come back immediately and we are seeing a similar pattern to what happened two years back and we are drifting back to uncertain territories,” said Aseem Dhru, CEO, HDFC Securities.
The BSE Metal index fell 5.1 per cent on Tuesday, and consumer durables 4.5 per cent.