Sensex sees biggest 2-day fall in 14-months; IT stocks hit

Indian markets came under huge selling pressure for a second day running with the BSE Sensex falling over 1.5 per cent and the broader Nifty dropping nearly 100 points. The rupee traded slipped sharply at 54.80 against the dollar.

The Sensex fell 292 points to close at 18,510, while the Nifty declined 98 points to 5,575. It closed below its 200-day moving average of 5,638. The Sensex also broke its 200-day moving average of 18,593.

The Sensex has lost 531 points over the last two sessions, its biggest slide since February, 2012.

The big worry for investors is foreign institutional investors have turned net sellers over the last two days. FIIs have invested over $10 billion this year and have been the biggest factor in supporting markets despite sluggish growth and weak macro.

Market analyst did not discount sharp downsides with Jai Bala of www.cashthechaos.com highlighting 5,548 as a strong support for markets in the short term.

However, Anil Manghnani of Modern Shares and Stock Brokers told NDTV that markets are oversold so a bounce is around the corner. 5,550-5,500 should be a strong support before markets attempt a pullback, he said.

"There is no clarity over a lot of issues. There are concerns about the Budget getting passed, about how long this government will last," SV Prasad of Chime Consulting said.

Technology shares fell, with Infosys down 3 percent and Tata Consultancy Services falling 2.3 per cent on negative economic data from the United States, which is the biggest outsourcing market for Indian tech firms.

Bank shares also fell a day after data showed advances grew at a slower pace in 2012-13 compared with a year earlier, and fell short of the central bank's projection, hurt by lower demand for credit from companies in a slowing economy.

ICICI Bank declined 2.2 per cent, while HDFC Bank ended 1.2 per cent lower. State Bank of India slipped 1.8 per cent.

Coal India was the top Nifty gainer, up 3 per cent, on hopes of share sale offer by the government. However, Dr Reddy's Laboratories gained 2.8 per cent after the company launched Zoledronic Acid injection in the United States