Indian markets fell along with global peers ahead of the Minutes of the Federal Reserve meet, which is due later today.
The Sensex which had rallied by more then 300 points in early trade suddenly collapsed in the last 2 hours of trades to end lower by points 266 points (provisional). With today's drop the Sensex has fallen more then 1400 points in the last 4 trading sessions.
Banking stocks which had a solid rally in early morning trade following the RBI measures to ease liquidity gave up most of the gains. ICICI Bank which had rallied almost 4 per cent in early trade ended the day with losses of over 2 per cent. Similar was the case with SBI and Union Bank.
However, private sector banking names like Yes Bank and IndusInd Bank ended the day with gains, despite giving up most of their gains. In fact, Yes Bank was up as much as 15 per cent in early morning trade and ended the day with gains of just 2 per cent.
Dealers say that the sharp fall in bellweather stocks particularly ITC, Sun Pharma, Cipla, Infosys and HCL today could open the floodgates for a further downslide in the markets.
All of these stocks along with Reliance Industries which shed more then 2 per cent in trade contributed to today's fall.
Among the top Nifty losers in trade was Ranbaxy Labs, Sesa Goa, Jaiprakash Associates, Cairn India, ACC and Dr Reddy's Labs.
Markets are expected to remain volatile as the debate on when the Fed would taper continues to haunt emerging markets.