Market benchmark Sensex heavily lost ground today and slumped by 262 points to hit a 21-month low despite firm European equities and positive US index futures as domestic lenders came under heavy selling pressure after posting disappointing quarterly numbers.
The NSE Nifty also fell to its lowest level in 21 months.
Country's largest lender SBI fell by 4.82 per cent to Rs 158.95 ahead of its financial results, while banks-based index on BSE slipped by more than 2 per cent.
Meanwhile, Finance Ministry today attributed the fall in domestic equities to turmoil in global economy and said the government is taking measures to address the challenges.
"The continuous surge in yen and gold is keeping investors on the toes, while a surprise uptick in the European market has provided some intermediate deviation from the low," said Vinod Nair, Head-Fundamental Research at Geojit BNP Paribas.
Weak Asian cues, however, continued to spoil the mood.
The BSE Sensex resumed lower at 23,938.32 and fell further to 23,636.72 before concluding at almost 21-month low of 23,758.90, showing a loss of 262.08 points or 1.09 per cent. The index had ended at 23,551.00 on May 12, 2014.
The NSE Nifty also dropped by 82.50 points or 1.13 per cent to close at nearly 21-month low of 7,215.70. It had closed at 7,203 on May 16, 2014.
Hit by mounting bad loans, three public sector banks, Central Bank of India, Allahabad Bank and Dena Bank yesterday reported losses while Punjab National Bank posted a sharp decline in profit for the third quarter of 2015-16.
PNB slumped by 9 per cent, Central Bank sank 12.37 per cent, Allahabad Bank shed 9.61 per cent while was down 5.20 per cent.
"The road ahead looks jittery with the upcoming Budget and the deepening slowdown in the rest of the world," Nair added.
Overseas, Asian markets ended weak as concerns mount over global recession. Japan's Nikkei ended with losses of 2.31 per cent adding to the 5.41 per cent plunge on Tuesday. Singapore Straight Times also finished lower by 1.57 per cent.
European equities were higher after dropping for seven straight sessions. Key indices like France, Germany and the UK rose by 0.93 pct to 2.11 per cent.
The US index futures were higher ahead of the start of Federal Reserve Chair Janet Yellen's testimony before Congress Wednesday.
Shanghai Composite closed 2.02 per cent lower while
indices in Japan, South Korea and Taiwan rose by up to 1.26 per cent.
European shares were trading lower before the ECB meeting. Key indices in France, Germany and UK fell by up to 0.11 per cent.
The market breadth turned negative as 1,400 shares ended lower, 1,195 closed higher while 153 ruled steady.
The total turnover fell to Rs 2,524.63 crore, from Rs 2,675.79 crore yesterday.
