Benchmark BSE Sensex declined nearly 340 points to close below the 58,000 level on Tuesday, marking its fourth straight day of losses as auto, IT and financial stocks wilted amid concerns over the fallout of failure of two US-based banks.
The 30-share BSE Sensex fell 337.66 points or 0.58 per cent to settle at anew five month low of 57,900.19. During the session, it touched a high of 58,490.98 and a low of 57,721.16.
The broader NSE Nifty declined 111 points or 0.65 per cent to end at a five-month low of 17,043.30, with 38 of its scrips ending in the red.
Analysts said relentless foreign capital outflows, investors junking riskier assets and weakness in the rupee against the US dollar hit the market sentiment.
M&M was the biggest loser in the Sensex pack, declining nearly 3 per cent, followed by TCS, Bajaj Finance, Wipro, Kotak Bank, Tech Mahindra, HCL Tech and Tata Motors.
In contrast, Titan, Bharti Airtel, ICICI Bank and L& were among the gainers, rising up to 0.93 per cent.
In the broader market, the BSE smallcap gauge fell 0.84 per cent and the midcap index declined 0.46 per cent.
"Markets are dancing to the global tunes and we'll see the reaction to the US inflation in early trade on Wednesday. Indications are in the favour of some breather after the recent slide but the upside seems capped too," Ajit Mishra, VP - Technical Research, Religare Broking Ltd, said.
On March 12, US regulators closed Signature Bank, just two days after shutting Silicon Valley Bank, following mass withdrawals of customer deposits from these regional banks.
Moody's on Tuesday said that most Asia Pacific financial institutions are not exposed to the failed US banks and are not as susceptible to large losses from debt security holdings as Silicon Valley Bank was, Moody's said on Tuesday.
In Asian markets, Shanghai, Tokyo, Hong Kong and Seoul ended with significant losses.
However, European equity markets were trading on a mixed note in the afternoon trade. Major indices on Wall Street settled lower in the overnight trade.
Meanwhile, the rupee declined 26 paise to close at 82.49 against the US dollar on Tuesday.
International oil benchmark Brent crude declined 1.56 per cent to $79.51 per barrel.
Foreign portfolio investors (FPIs) offloaded shares worth Rs 1,546.86 crore on Monday, according to exchange data.
Meanwhile, the wholesale price-based inflation declined to an over two-year low of 3.85 per cent in January on easing prices of manufactured items, fuel and power, even though food articles remained expensive.
Retail inflation dipped marginally to 6.44 per cent in February, mainly on account of a slight easing in prices of food and fuel items though it remained above the Reserve Bank's comfort level of 6 per cent for the second month in a row.