Devaluation of Chinese yuan, a plunge in global commodity prices coupled with a depreciating rupee and stalled reforms process dampened sentiments in the Indian equity markets on Wednesday.
The negative global and local cues just ahead of the release of key economic data points unnerved investors, forcing the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) to plunge 354 points in the day's trade.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed deep in the red. It ended 113 points or 1.33 percent down at 8,349.45 points.
The S&P BSE Sensex, which opened at 27,880.76 points, closed at 27,512.26 points, down 353.83 points or 1.27 percent from the previous day's close at 27,866.09 points.
The Sensex touched a high of 27,883.33 points and a low of 27,479.43 points in the intra-day trade.
Analysts observed that the domestic markets remained under pressure due to international cues even as commodity and banking stocks plunged. Profit bookings were widely witnessed in the mid and small cap counters.
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"Yuan's surprise devaluation for the second day has stroked fears of a competitive devaluation, especially before US Fed's monetary policy decision," said Anand James, co-head, technical research desk, Geojit BNP Paribas.
"The Indian rupee fell to Rs.65 to a dollar. However, the depreciation in rupee value has helped the IT and other exports related stocks to rise."
Investors were also anxious over the Consumer Price Inflation (CPI) and Index of Industrial Production (IIP) data set to be released on Wednesday.
According to Devendra Nevgi, chief executive of ZyFin Advisors, with more parties giving in-principle agreement to GST (goods and services tax), the chances of the bill getting passed in this session remained alive.
"There is still hope that the government will be able to pass the GST bill. However it is going to be close as only one day remains for the session to end," Nevgi told IANS.
The monsoon session of parliament ends on Thursday, with the fate of key legislations like the GST and the land bill hanging in the balance.
Sector-wise, banking, automobile, capital goods, metals and oil and gas stocks came under heavy selling pressure. However, IT, technology, entertainment and media (TECK), consumer durables and healthcare index ended in the green.
The S&P BSE banking index plunged by 644.35 points, followed by automobile index which tanked by 494.05 points, capital goods index sank by 370.99 points, metal index receded by 361.63 points and oil and gas index declined by 334.12 points.
The S&P BSE IT index zoomed by 292.25 points, TECK index jumped by 107.74 points, consumer durables index rose by 93.95 points and healthcare index gained by 86.25 points.
Major Sensex gainers during Wednesday's trade were Infosys, up 3.39 percent at Rs.1,141.75; Sun Pharma, up 2.90 percent at Rs.866.25; Tata Consultancy Services (TCS), up 2.63 percent at Rs.2,671.40; Wipro, up 1.75 percent at Rs.576.15; and Lupin, up 1.28 percent at Rs.1,718.65.
The major Sensex losers were: Vedanta, down 8.03 percent at Rs.113.90; Hindalco Inds, down 7.21 percent at Rs.95.90; Coal India, down 5.53 percent at Rs.371.45; State Bank of India (SBI), down 4.77 percent at Rs.256.45; and Tata Motors, down 3.92 percent at Rs.355.30.
Among the Asian markets, Japan's Nikkei was down 1.58 percent, Hong Kong's Hang Seng declined by 2.38 percent, China's Shanghai Composite Index fell by 1.03 percent.
In Europe, the London FTSE 100 index lost 1.11 percent, Germany's DAX Index receded by 2.31 percent, and French CAC 40 fell by 2.42 percent at the closing bell here.