Extending its losses for the second successive session, the BSE benchmark Sensex today plunged by 132 points as weak global cues and worries of another rate hike by the Reserve Bank weighed on the investor sentiment.
Tracking weak Asian markets, the 30-share barometer of the Bombay Stock Exchange opened on a weak note and a lower opening on European bourses further dragged it down. The Sensex closed the day at 18,179.64, down by 131.95 points, or 0.72 per cent.
In the past two sessions, the Sensex has lost nearly 230 points.
The wide-based 50-share Nifty index of the National Stock Exchange slipped by 0.78 per cent and finished at 5.462.35. The market was also sluggish ahead of the expiry of derivative contracts, analysts said.
Stock markets across the world tanked today as investors stayed away from riskier assets, with the fragile pace of the economic recovery weighing on the investment sentiment.
"Prudent profit-booking ahead of settlement in the F&O segment, coupled with losses in overseas markets dragged the indices," Networth Stock Broking Head of Institutional Business Prakash Diwan said, adding that, "The current phase of consolidation may continue in coming sessions."
China's benchmark Shanghai Index plunged over 2 per cent and Japan's Nikkei index by 1.66 per cent. European bourses, too, were in negative terrain, with Britain's FTSE down 0.39 per cent.
Analysts said the already dampened market sentiment was further hurt after a key US report showed that sales of existing homes have dived by 27.2 per cent to a 15-year low.
Interest-rate sensitive stocks, such as banking, realty and auto, were among the worst hit on fears that high inflation may trigger another interest rate hike by the RBI.
The RBI yesterday expressed concerns over high inflation, which analysts said may trigger monetary tightening by India's central bank.
DLF plunged by 3.35 per cent, the most in the Sensex pack. ICICI Bank lost 1.67 per cent, SBI 0.82 per cent, HDFC Bank 0.63 per cent and HDFC 0.90 per cent.
Among the frontline auto stocks, Hero Honda sank 2.32 per cent, Maruti 1.14 per cent, Tata Motors 1.82 per cent and M&M 0.31 per cent.
The Reserve Bank, in its annual report for 2009-10, said the country's economic recovery is robust, though it expressed concern over the prevailing high inflation caused by supply-side bottlenecks, which it warned could hamper sustainable growth.