Across market two stocks fell for every counter that rose and as a result Rs 1 lakh crore investor wealth was wiped off. Selling was so strong that all 13 sectoral indices closed with losses in 0.42 per cent and 3.39 per cent range with realty, IT, consumer durable, banking, metal and power hit maximum.
After opening weak, the 30-share Sensex dropped by 291.94 points, or 1.55 per cent, to end at 18,509.70, a level last seen on November 23 as overseas funds remained net sellers. The index had lost 239 points yesterday.
Besides worries over economic health of US, IT stocks saw selling ahead of FY13 earnings of Infosys next week. Infosys and TCS lost over 2 per cent each.
Private banks, including ICICI Bank and HDFC Bank, fell on worries over loan growth amid a subdued economic scene.
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Sensex heavyweights Reliance Industries (RIL) and ITC saw sharp losses on heavy selling by foreign funds, said brokers.
The broad-based National Stock Exchange index Nifty plunged below 5,600 level by losing 98.15 points, or 1.73 per cent, to 5,574.75. Investors also feared the fourth quarter earning season give a gloomy picture, traders said.
In Asia, Singapore, Hong Kong, S Korea and Indonesia markets suffered as reports said North Korea appears to have moved a medium range missile capable of hitting targets in South Korea. However, Japan's Nikkei closed 2 per cent higher.