Markets reeled under pressure for the third straight session due to losses in index heavyweights, and nervousness prevailing in the global markets over disagreement on US debt ceiling.
The Nifty opened gap down and touched a low of 5,476 in the morning session tracking weak global cues.
Losses in heavyweight Reliance Industries, Infosys and HDFC Bank continued to weigh on the markets.
The Nifty closed near day's low at 5,488, down 59 points and the BSE benchmark, Sensex ended at 18,210, down 223 points.
There was risk aversion towards equities on concerns that US may default on debt, if there is no consensus on raising the debt limit before the August 2nd deadline.Japan's Nikkei Stock Average declined 1.5%, South Korea's Kospi Composite lost 0.8%, Hong Kong's Hang Seng Index ended on a flat note, at 22,571 and China's Shanghai Composite index slipped 0.5%.
European markets also dipped over US debt woes and gloomy earnings report. FTSE 100, CAC 40 and DAX were down between 0.3-1%.
Back in India, the Nifty has lost almost 220 points after it touched a high of 5,700 on Monday, and today the index slipped below the psychological support of 5,500.
Shanu Goel, Senior Research analyst-Bonanza
On the downside, support is seen at 5,475-5,440."
Among individual stocks, ITC surged 2.6% to Rs 206 after it reported 25% jump in net profit, to Rs 1,333 crore.
However, HUL dipped 1% after net profit jumped 18%, to Rs 627 crore.
Metal shares lost sheen, BSE metal index was off 2.5%; Welcorp plunged 6%, JSW Steel lost 5% and Bhushan Steel fell 4.8%.
BSE Realty index fell 1.8% on concerns that rise in interest rates may continue to dent demand for new homes. Orbit Corporation plunged 7%, Unitech fell 4.4% and Indiabulls Real Estate was down 4%.
Among the front line shares, Reliance Industries slipped 2.7%, HDFC Bank declined 2.8% and Infosys was off 1.7%%, the three index heavyweights dragged the Sensex down by 120 points.
Only 6 components on the Sensex ended in the green, of which BHEL gained 1.2%, Hero Honda added 1.1% and Bajaj Auto was up 1.6%.
The broader market indices were also trading on a weak note. The BSE mid-cap index and the small-cap index were down 0.9% each.
The overall breadth of the market was extremely negative, 1870 stocks declined, while 922 stocks advance.
