The Bombay Stock Exchange benchmark Sensex on Tuesday tumbled by over 240 points on selling pressure in financial company stocks, sparked by fears of an imminent hike in interest rates.
The Sensex, which had gained nearly 200 points in the previous session, closed down by 240.17 points at 17,534.09.
Similarly, the wide-based National Stock Exchange index Nifty fell by 77.35 points at 5,256.15.
Marketmen said investors feared an imminent hike in interest rates in the wake of the government increasing petrol and diesel prices last week. The central bank is expected to tighten money supply to rein in the inflation, which is already in double digits.
Reserve Bank Deputy Governor KC Chakraborty's remarks that interest rates might be raised "any time" also added fuel to the fire.
The rise in petrol and diesel prices will have a short-term impact on inflation but will be absorbed by July, Finance Minister Pranab Mukherjee had said on Monday.
The weakening trend in the Asian markets and a lower opening in Europe further fuelled the downtrend.
Banking, metal and refinery sector stocks bore the maximum brunt of selling.
Bluechip Reliance Industries fell by Rs 20.70 to Rs 1067.30 and IT major Infosys dropped by Rs 13.95 to 2790.40. ICICI Bank lost Rs 19.75 to Rs 848.85. The three put together carry nearly 27 per cent weight on the Sensex.