The 30-share benchmark Sensex plunged 10% in two weeks to fall below the psychological level of 16,000 points even as the market showed signs of a further slide ahead on growing concerns of a likely interest rate hike after the RBI raised inflation projection.
Heavy losses after the market touched more than its 17-month high of 17,493.17 on Diwali 'muhurat' trading on October 17 is seen by analysts as a healthy correction to the overbought market.
In the week to October 31, the Bombay Stock Exchange tumbled by 914.53 points or 5.44% to end the week at an eight-week low of 15,896.28 from its last week's close, while it recorded a 10% fall or that of 1,596 points from the 'muhurat' trading high.
The broader 50-share Nifty of the National Stock Exchange also dropped by 285.35 points or 5.71% to end at 4,711.70 points from its previous week's close. It had risen to a high of 5,176.80 during Diwali trading.
The market witnessed high volatility in the week under review due to heavy rollover of positions in the derivatives segment as the October contract expired on Thursday.
The market registered heavy losses on October 27 as the RBI raised the statutory liquidity ratio (SLR) by one% to 25%, which is expected to drain liquidity to the tune of Rs 30,000 crore from the system.
The RBI left its key rates unchanged but projected that inflation could touch 6.5% with an upward bias in this fiscal leading to concerns about a rate hike in the near term.
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The market, however, is expected to take cues from the global markets and FII activity in the absence of any major domestic trigger with key players like RIL and Bharti Airtel coming out with disappointing numbers for the second quarter.
FIIs were net buyers for the first three days of the week and sold shares worth Rs 1,594.60 crore on Thursday. As per SEBI's provisional data, they pumped in Rs 576.05 crore on Friday while Domestic Institutional Investors (DIIs), too, injected Rs 592.93 crore on the same day.
Market participants seemed to ignore economic growth projection of 6.75% this fiscal by Prime Minister's Economic Advisory Council following weak global markets.
Rise in inflation to 1.51% for the week ended October 17 as against 1.21% last week weighed on the interest rate-related counters towards end of the week.
From the sectoral indices, BSE-Realty tumbled by 695.68 points or 15.38%, BSE-Metal by 1,480.79 points or 9.60%, BSE-Power by 282.41 points or 9.00 and Bankex by 895.25 points or 8.75%.
The turnover on the BSE and the NSE rose to Rs 27,550.46 crore and Rs 95,135.66 crore from last week's turnover of Rs 22,297.16 crore and Rs 69,176.87 crore, respectively.
The BSE and the NSE will remain closed on Monday, November 2, on the occasion of 'Gurunanak Jayanti'.