The Bombay Stock Exchange benchmark Sensex on Friday shed early gains and plunged over 240 points as investor confidence ebbed with a rise in inflation.
The Sensex, which had gained 63.13 points at the outset, clocked a hefty loss of 240.51 points at 11,876.43 as selling started soon after news of inflation rise came in.
The 50-share National Stock Exchange index Nifty dropped 63.20 points at 3,620.70, after touching the day's high of 3,711.25 points.
Marketmen said selling pressure sparked soon after news came that inflation rose to 0.70 per cent for the week ended April 25, a level more than market participants' expectations.
They said the funds as well as general investors adopted a cautious approach towards the stock markets amid uncertainty on the outcome of the general elections results, to be announced on May 16.
The banking sector suffered heavy losses as the HDFC Bank stock fell most in more than a month after DBS Bank sold its 2.73 per cent stake in the lender.
The banking sector index was the biggest loser, shedding 3.21 per cent to 6,007.47, as HDFC Bank dropped 2.83 per cent, ICICI Bank 5.19 per cent and State Bank of India 3.06 per cent.