The 30-share index opened on a robust note and even touched a one-week high of 16,366.72 on firm Asian cues on the back of strong rally on Wall Street yesterday.
However, with rupee plunging well below the psychological 55-level despite RBI measures, investors became jittery and resorted to hectic selling.
The index finally closed at 16,026.41, down 156.85 points or nearly 1 per cent. Investors became poorer by Rs 45,000 crore as over 1,500 stocks fell across the market while just 1,082 scrips ended higher.
The Sensex had gained 153 points in the past three days even as rupee kept touching fresh lows with each passing day.
"For two days in a row, we have seen markets give up gains after rupee hit record lows. Investors worry that deficits will swell as India is a big importer," said Dipen Shah, Head of Fundamental Research, Kotak Securities.
The rupee, the weakest currency in Asia this year, today fell to a new low of 55.45 and was last trading at 55.40.
"The government is taking a series of steps. However, managing rupee is market-related... As and when RBI will consider necessary they will intervene," Finance Minister Pranab Mukherjee today said.
Tata Power which lost 5.3 per cent ahead of its results led losers in the Sensex pack, followed by Maruti (4.5 pc), Sterlite Industries (3.96 pc) and SBI (3.43 pc).
"From the valuations as well as Q4 earnings perspectives, things do not look too bad for the Indian markets. However, rupee is causing a heart-burn. The Eurozone worries are also keeping global investors on tenterhooks. Once the rupee stabilises, FII money will come in. This could happen as early as June after Greece polls," said Manish Sonthalia, VP & Fund Manager, Motilal Oswal AMC.
The NSE 50-share Nifty also dropped by 45.55 points or 0.93 per cent to 4,860.50. (MORE)
