Mumbai: Profit-booking in recent winners snapped a two-session rally Tuesday as the market benchmark Sensex plunged by 362.15 points to 23,191.97, dragged down by investors cutting exposure to public sector banks even as global cues remained positive.
The broader NSE Nifty too struggled and settled below the crucial 7,100-level.
All the sectors ended lower with capital goods and realty closing down 3.06 percent and 3.03 percent, respectively.
Higher global advices failed to give tonic to the domestic market, a broker said.
Banking stocks, which had witnessed heavy buying yesterday came down crashing hard after country's biggest lender State Bank of India said bad loans are expected to surge in the March quarter, which may impact profits.
Sentiment also took a hit after exports dipped for a 14th month in a row, down 13.6 percent in January to USD 21 billion due to fall in petroleum and engineering goods shipments, even as trade deficit showed improvement.
"After two days of hope filled rally, prices were grounded again, with renewed concerns over NPAs dragged banks lower again, and deflated bullish sentiments," said Anand James, Co Head Technical Research Desk, Geojit BNP Paribas.
The BSE Sensex resumed higher at 23,688.61 and hovered in a range of 23,692.08 to 23,164.54 before ending at 23,191.97, showing a loss of 362.15 points or 1.54 percent.
The index had gained by 602.29 points or 2.62 percent in the previous two sessions.
The NSE 50-share Nifty dropped by 114.70 points or 1.60 percent to end at 7,048.25.
Shares of SBI plunged nearly 7 percent, wiping-out Rs 8,422 crore from its market valuation, after the company said bad loans are expected to surge in the coming quarter, which may hit its profitability.
Overseas, European stocks were trading higher in their afternoon trade, supported by hopes for fresh easing measures by European Central Bank (ECB).
In Asia, Chinese stocks led gains in regional indexes after a latest data showed new loans from Chinese financial institutions hit a monthly record in January.
In mainland China, Shanghai Composite ended 3.29 percent higher, while Hong Kong's Hang Seng index rose 1.08 percent. Other indices like Japan, Singapore, South Korea and Taiwan rose by 0.20 percent to 1.80 percent.
Key indices in Europe, like France and the UK firmed up by 0.22-0.40 percent while Germany's DAX was quoted lower by 0.24 percent.
In domestic market, 26 scrips fell from the 30-share Sensex pack.
Major losers were SBI (6.49 percent), Tata Motors (4.88 percent), BHEL (4.35 percent), GAIL (3.76 percent), L&T (3.59 percent), ICICI Bank 3.24 percent), Cipla (2.99 percent), Axis Bank (2.86 percent), ITC (2.72 percent), Sun pharma (2.54 percent) and Lupin (2.35 percent).
From the gainers pack, Adani Ports rose 4.78 percent, NTPC perked up 2.12 percent and Dr Reddy's gained 0.16 percent.
In broader markets, small-cap index fell by 2.25 percent, while mid-cap ended 2.43 percent lower.
Among BSE sectoral indexes capital goods fell by 3.06 percent, followed by realty 3.03 percent, telecom (2.93 percent), industrials (2.63 percent), oil&gas (2.32 percent), healthcare (2.27 percent), bankex (2.11 percent), FMCG (2.00 percent) and energy (1.83 percent).
The market breadth turned negative as 2,007 stocks ended lower, 614 closed higher while 104 ruled steady.
The total turnover fell to Rs 2,604.51 crore from Rs 3,031.74 crore yesterday.