After breaching the psychologically important 10K level, the Bombay Stock Exchange 30 share index fell by 7.63 per cent in the week under review as Foreign Institutional Investors pulled out at the year end.
Negative factors such as lacklustre trading in global markets in view of Christmas holidays, a sharp fall in advance tax payments and fears of poor corporate earnings in the third quarter virtually dismissed easing inflationary pressure that further raised possibility of cut in rates.
In the week ending December 27, the market remained in the red throughout with the BSE barometer ending the week lower at 9,328.92 points, a net fall of 770.99 points or 7.63 per cent from its previous weekend close.
The broader 50 share Nifty of the National Stock Exchange also tumbled by 220.25 points or 7.16 per cent to settle the week at 2,857.25 from its last weekend's close.
The markets were under pressure mainly because of selling by Foreign funds which pulled out about 959 crore from equity including on Friday's provisional number as well as fears that the Q3 corporate earnings may not be as anticipated earlier in the light of a 22 per cent fall in advance tax collection.
Analysts said a slowdown in industrial growth could be one of the factors affecting advance tax payments.
Controversy surrounding India's fourth largest software exporters Satyam Computer, which was barred by the World Bank from doing business with it for eight years also had a sentimental impact on the market.
They said corporate earnings which will start pouring in the second week of January 2009 are expected to give direction to the market.
Meanwhile, falling inflation further raised possibility of the Reserve Bank trimming key rates and reserve ratios in the near future. Inflation dipped to a 9 month low of 6.61 per cent from this year's peak of 12.91 per cent.
Investors anticipate a smart recovery in the market after a fresh set of monetary and fiscal measures by the government.
Selling was so strong that all sectoral indices recorded an average fall of 2.5 per cent to 13.0 per cent at the weekend and all 30 share based indices also ended in the red.
Realty stocks reeled under a fresh selling onslaught after a smart recovery in the last three weeks, on reports of falling real estate rates amid slackening demand.
The BSE Realty Index tumbled by 324.42 points or 12.85 per cent to end the week at 2,200.92.
The broad-based BSE-100 Index plunged by 364.25 points or 7.03 per cent to end the week at 4,817.69 from its last weekend's close.
The BSE-200 Index and the Dollex 200 were quoted sharply lower at 1,115.86 and 383.12 points at the weekend compared with their last weekend's close of 1,196.84 and 422.34 points respectively.
On the NSE, the S&P CNX Defty slumped by 218 points or 9.65 per cent to finish the week at 2,040.25 from 2,258.25 points last weekend.
The CNX Nifty Junior also dropped by 277.85 points or 6.04 per cent to 4,325.25 from preceding weekend's close of 4,603.10.