The 30-scrip sensitive index (Sensex) of the S and P Bombay Stock Exchange (BSE), which opened at 18,460.72 points, closed at 17,968.08 points, down 590.05 points or 3.18 percent from the previous day's close at 18,558.13 points.
The Sensex touched a high of 18,460.72 points and a low of 17,921.82 points during trade so far.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed the day's trade down 189.05 points or 3.45 percent down at 5,287.45 points.
"The markets grappled with negative global cues, geopolitical tensions and firming crude prices. The Food Security Bill was passed yesterday (Monday) which is expected to add to the fiscal burden," said Sanjeev Zarbade, vice president, private client group research, Kotak Securities.
"We believe, crude oil has emerged as a key risk in the near-term, which is not a good sign for the INR (rupee). Thus, on an overall basis, the macroeconomic outlook has weakened and risks have clearly strengthened."
The bearish sentiments were fanned by the steep fall in the rupee, which tumbled to its historic low of of 66.25 against a dollar, surpassing its previous record low of 65.56 against a dollar on Aug 22.
The partially-convertible rupee later recovered to the 65-level, but closed at 66.24 -- a depreciation of 2.36 percent from its Monday's close of 64.72 against a dollar.
Earlier in the day, Finance Minister P. Chidambaram said the rupee had overshot its true level and that the phenomenon of depreciating currency value is being faced by other emerging markets also.
There were also concerns over the effect the Food Security Bill, passed by the lower house of Parliament Monday, will have on the current account deficit. The bill entails expenditure of nearly USD 20 billion.
Month-end dollar demand from importers dragged the currency lower, said traders.
In Tuesday's trade, except for the information technology (IT) sector, all other scrips were trading in the red.
Heavy selling pressure was observed in banking index (bankex), capital goods, metal, automobile and public sector undertakings (PSUs).
The S and P BSE bankex plunged 569.94 points, capital goods index tanked 345.17 points, metal index dropped by 278.16 points, automobile index slipped 265.19 points and PSU index dipped 198.38 points.
However, the IT index went up by 11.83 points.
The major Sensex gainers were: Infosys, up 0.91 percent at Rs.3,058.10; DrReddys Lab, up 0.53 percent at Rs.2,162.25; and the newest member of the 30 sensitive index Sesa Goa gained 0.18 percent or 0.30 points at 167.55. Sesa Goa has replaced Sterlite Industries which is being merged with the company.
The main losers were: BHEL, down 9.49 percent at Rs.112.05; HDFC Bank, down 8.04 percent at Rs.560.90; HDFC, down 7.70 percent at Rs.686.85; NTPC, down 5.86 percent at Rs.124.50; and Jindal Steel, down 5.68 percent at Rs.230.50.
Among the Asian markets, Japan's Nikkei closed 0.69 percent down while Hong Kong's Hang Seng went down by 0.59 percent. China's Shanghai Composite Index was higher by 0.34 percent.
In Europe, London's FTSE 100 was trading 0.80 percent down, while Germany's DAX Index was lower 1.92 percent. However, the French CAC 40 Index was higher by 1.89 percent.
--IANS (Posted on 27-08-2013)