Smart gains by equity markets abroad and higher industrial output in June failed to lift the spirits at BSE Sensex, which sank 220 points to below the 17,000 level on Friday.
The Bombay Stock Exchange 30-share index, Sensex, which started on an upbeat note with gains of 1.1%, dropped 219.77 points, or 1.29% to 16,839.63 as investors sold rate-sensitive stocks on fears of an imminent rate hike due to a persistently high inflation.
The gauge fell for the eighth time in nine days even as the industrial growth in June rose to 8.8%, which finance minister Pranab Mukherjee said was "encouraging".
Massive selling in IT, Teck, Bank, Realty, Power and metal sectors brought the market fall. Sensex leader RIL that fell 1.63%, Infosys 2.64%, HDFC Bank 2.32%, and Tata Motors 5.26% contributed the most to the Sensex fall.
Traders added jittery investors preffered to lighten their positions ahead of a long week-end amid uncertainity in global economic recovery with the riots sweeping across Britain and deepening of EU debt crisis.
Broad-based National Stock Exchange index Nifty fell by 65.35 points, or 1.27% to 5,072.95, after rising to 5,194.45 in the opening session.