The benchmark BSE Sensex fell below the 27,000-mark on Wednesday by falling 351 points as investors trimmed positions in realty and FMCG stocks as hopes of another rate cut this year took a hit on fears of a drought in the country.
Market took further jolt after services sector activity contracted for the first time in 13 months in May, largely due to decline in new order flows amid competitive pressure. In last two sessions, the Sensex has lost 1,011.79 points.
The Met department has projected monsoon this year to be "deficient", which has triggered fears of a drought.The RBI on Tuesday lowered borrowing costs by 0.25% but linked further reductions to the monsoon.
Reacting to developments, NSE Nifty ended with a loss of25.25 points at 8,102.10 -- its weakest close since December 17.The Sensex after remaining in positive zone briefly at the outset, slipped into the negative zone and dipped below the27,000-mark to hit a low of 26,698.26.
It settled 351.18 points or 1.29% at 26,837.20.The 50-scrip Nifty after breaching the key 8,100-mark intra-day to touch a low of 8,094.15 ended at 8,135.10, down 101.35 points or 1.23%.
The biggest selloff was seen in realty stocks, with the BSE realty sector index sinking 5.54%.Unitech crashed 35.17% and HDIL tanked 6.03%, while DLF stocks fell 2.48%.
Shares of Nestle India saw another session of selling pressure and slumped 9.21% amid growing concerns about safety standards of its popular Maggi noodles.Interest-sensitive stocks, SBI, ICICI Bank, Yes Bank and Canara Bank bore the brunt for the second straight session.
Globally, Asian markets ended on a mixed note, while European markets were lower in their early trade as investors awaited the outcome of Greek debt talks and the European Central Bank's monthly interest-rate announcement.
Tata Power shares was the biggest loser by falling 6.13% on the Sensex. Shares of ITC, Vedanta, GAIL, ONGC, BHEL, Hindalco, HUL, Tata Motors, Dr Reddy's, Sun Pharma and M&M also weighed heavily.