Investors remained rattled after RBI on August 14 unveiled stern measures, including curbs on Indian firms investing abroad. Sensex last Friday crashed by 769 points -- the worst fall in 4 years -- on fears that more steps will be announced to control capital outflows to shore up the unit.
Weakness in global markets and speculation over the US rolling back its economic stimulus package as early as next month also affected the sentiment.
FII selling in shares of banks, auto, pharma and FMCG eroded Rs 1 lakh crore in investor wealth with Sensex ending at 18,307.52, a drop of 290.66 points or 1.56 per cent.
ICICI Bank, Bharti Airtel and Bajaj Auto were among biggest Sensex losers.
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Similarly, the 50-issue NSE CNX Nifty also dipped by 93.10 points, or 1.69 per cent, to end at 5,414.75 -- the lowst since September 2012. Also, SX40 index closed down 201.76 points, or 1.82 per cent, at 10,881.76.
Banks were hit on concerns over mark-to-market losses on banks' portfolios, brokers said.
Bucking the weak trend, software exporting companies led by Infosys rose over one per cent on hopes the fall in rupee would improve their revenues.