The Nifty and the Sensex dropped for the fourth session in a row, weighed down by the rising rupee and also rising crude prices.
Investors were also worried that rising oil prices would impact the fiscal deficit. Foreign Portfolio Investors, who have pulled-out heavily from the markets in the last two months, were also reported to have been selling.
The Sensex ended trade lower by 300 points, while the Nifty dropped 300 points in trade. Losses were led by some serious selling in banking stocks. ICICI Bank was the biggest loser from the larger private banking space and lost near 3 per cent. Tata Motors too ended lower and has now dropped significantly from higher levels to Rs 307 mark.
Shares in Avenue Supermarts fell 5 per cent, after reports that promoter Radhakishan Damani is going to sell up to 1 percent stake to meet minimum public shareholding norm.
Investors were seen taking shelter in FMCG stocks, as sentiments remained weak. Among the FMCG stocks that gained in trade were ITC and Hindustan Unilever. Analysts are now suggesting investors to stay invested in FMCG stocks as markets may continue to remain very volatile.
Meanwhile, markets across Asia saw good recovery and ended the day higher to flat. Among the notable gainers from the Asian space were the Japanese Nikkei and the Hong Kong's Hang Sang. European markets were trading with gains in the last few trading sessions. Meanwhile, the rupee stabilized to levels of 67.98 against the US dollar.