Banks bore the brunt of the sell off with private sector banks witnessing heavy selling in the last half hour. Among the major losers from the Nifty stocks were SAIL, Sterlite Industries, Tata Motors, Infosys and ITC.
Selling was aggravated after European shares turned lower, after a Citi economist said that there was a 90% possibility of Greece exiting the euro in 2013. The German DAX was down more than 1%, while the French CAC and UK's FTSE were trading marginally lower.
ITC which reported results in line with expectations dropped 2%, while Infosys plunged to a new 52 week low of Rs 2101.25. Among the few gainers were Sun Pharma and Hero Motorcorp.
Analysts expect the weak trend to continue in the absence of reforms, which the markets have hoped for. Reports today indicated that the government might not consider reforms in fuel and FDI in retail on account of opposition from allies.
This is likely to weigh on market sentiments at least in the short term.