Amidst a weakness in the European market, the benchmark Sensex of the Bombay Stock Exchange fell by 491 points or 3.1 per cent on Tuesday to close at 15,404.9, its lowest in the past two months.
The broader Nifty at the National Stock Exchange (NSE) fell by 148 points or 3.1 per cent to close at 4,563.
The European Union predicted better than expected growth in 2010, but experts believe the weakness will continue for some time.
“There is a global reversal in liquidity happening and investors are withdrawing from equities leading to the correction,” said the head of equity research at a multinational financial major on conditions of anonymity. “Central banks worldwide
are unexpectedly talking of reducing the monetary stimulus now and that is impacting the liquidity.”
China was one of the few gainers (up 1.2 per cent) in Asia. Japan was down 2.3 per cent and Hong Kong 1.8 per cent.
In India, major losers were real estate and metal stocks, by 9.8 per cent and 5.95 per cent respectively. Hindalco lost the most at 10.5 per cent on Tuesday.