With global financial markets continuing to reel under 'fiscal cliff' worries in the US and risk of recession in the world's largest economy, the overall investor mood was dampened. Deteriorating economic outlook in the eurozone added to the negative sentiment.
After a weak start, the market picked up momentum with good buying in select heavyweights. The key index, which saw range-bound trade in early part of the session, slipped back into the red as a string of earnings from bluechip firms fell short of market expectations, triggering a sell-off.
Reacting to the disappointing numbers, the 50-share index took a plunge but found some support at lower levels before closing with substantial losses.
Though, State Bank of India (SBI) reported a better- than-expected growth in Q2 net profit, asset quality of the country's largest lender remained a concern due to high NPA.
State-owned exploration giant ONGC posted a steep fall in profits, while Tata Steel reported losses in Q2.
Shares of sectors like bank, capital goods, metal, technology, infra and FMCG took a severe beating.
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The Nifty fluctuated between a high of 5,751.70 and a low of 5,677.75 before ending at 5,686.25, a sharp fall of 52.50 points, or 0.91 per cent, over the previous close.
SBIN, Tata Steel, ONGC, IDFC, Sesa Goa, BHEL, Siemens, Ambuja Cement, NTPC and JP Associates were the top percentage- wise Nifty losers. Key gainers included Cairn, Power Grid, Ultra Cem, Maruti, Lupin, Bajaj Auto and Grasim.
The turnover in cash segment declined to Rs 10,888.86 crore from Rs 11,132.91 crore yesterday. Overall, 6,761.71 lakh shares changed hands in 52,28,609 trades. Total market capitalisation was Rs 64,18,983 crore.