The benchmark BSE Sensex plunged by 470 points today to hit a fresh near eight months low of 26,370.98 and Nifty cracked 8,000-level as dealers preferred to trim their positions on concerns over below normal monsoon and slow credit growth.
Market participants ignored the sharp fall in current account deficit and positive global cues while remaining cautious ahead of macroeconomic data -- IIP for April and CPI for May, traders said.
"Low visibility of capex recovery and slow credit growth are...reasons for investors lightening their overweight stance on Indian equities," said Hitesh Agrawal - Head Research, Reliance Securities.
Traders added that investors preferred to book profits in stocks that rebounded in previous session. Sensex had jumped 359.25 points on value-buying after MSCI deferred inclusion of China A shares in its index keeping India weightage intact.
The 30-share gauge resumed strong today to hit the 27,000-mark and touched day's high of 27,000.14.
However on emergence of profit-booking it slumped to 26,348.93 before closing 469.52 points or 1.75 per cent down at 26,370.98.
Sensex had ended at 26,429.85 on October 20, 2014.
The broader NSE Nifty slipped below the important 8,000 and finally settled 159.10 points or 1.96 per cent lower at 7,965.35. Intra-day, it moved between 8,163.05 and 7,958.25.
"The recent disappointing Q4 earnings season, coupled with the somber management commentaries, has cast a shadow over the extent of recovery possible in the current fiscal," added Agrawal.
Stocks of Tata Power suffered the most among Sensex pack by falling 4.88 per cent, followed by Tata Motors 3.61 per cent.
Asian stocks ended higher following overnight gains in US markets. Key benchmark indices China, Hongkong, Japan, Singapore, South Korea and Taiwan rose by 0.26 to 1,68 per cent.
European stock markets were also trading higher in their morning trade following optimism over Greek financing talks.
Key indices in France, Germany and the UK moved up by 0.33 to 0.75 per cent.
Meanwhile, foreign investors continued their selling spree and sold shares worth Rs 482.11 crore yesterday.
Of 30-Sensex stocks, 29 stocks ended lower, while Vedanta finished in positive zone.
Major losers were Tata Power (4.88 pc), Tata Motors (3.61 pc), BHEL (3.24 pc), RIL (3.17 pc), Axis Bank (3.10 pc), Cipla (3.07 pc), Wipro (2.80 pc), M&M (2.63 pc), SBI (2.38 pc), Tata Steel (2.34 pc), NTPC (2.32 pc) and HDFC (2.02 pc).
Among the BSE sectoral indices, auto fell by 2.37 per cent followed by bankex (2.37 pc), power (2.31 pc), consumer durables (2.03 pc), realty (1.96 pc), consumer goods (1.80 pc), IT (1.47 pc), oil&gas (1.42 pc) and teck (1.30 pc).
Small-cap and mid-cap indcies also dropped by 1.55 per cent and 1.78 per cent, respectively.
Total turnover rose to Rs 2,508.28 crore from Rs 2,075.62 crore yesterday. The market breadth turned negative as 1,858 stocks ended lower, 781 finished higher and 110 ruled steady.