The benchmark index lost more than 1,100 points during the week, falling four sessions out of five in the weekly trade. There was weakness across sectors, with capital goods and oil and gas falling significantly.

Markets were concerned about a global slowdown, as reflected in demand from major oil producing organisations. Markets were cautious ahead of the inflation and industrial output data and the delay in any agreement on GST (goods and services tax) bill which is now expected to be taken up only in the next session of parliament.

"Fiscal reform in and outside the budget will be a major determinant of the market's movement over the next few weeks and months," said Dipen Shah, head- private client group research, Kotak Securities.

"Economic growth as well as interest rate movements will be determined by what measures are taken by the government to put the economy on a high growth path. Globally, developments in China and EU hold the key for the global markets, including India."

The benchmark Sensex was down by four percent or 1,107.42 in the week ended on December 13 from its previous weekly close on December 5. The index closed at 27,350.68 points, while it had ended trade at 28,458.10 points on December 5.

In the week ended on December 5 the Sensex was down by 0.82 percent or 235.89 from its previous weekly close on November 28. The index closed at 28,458.10 points, while it had ended trade at 28,693.99 points on November 28.

"The reasons for this correction in Indian equity market originated from the global markets starting with data point and changes in China, and reaction from the US and European markets spilling over to the other Asian equity markets," said Gaurang Shah, vice president, Geojit BNP Paribas.

"If one goes to see the correction on Index Sensex and Nifty from the high it has been in the range of 2.5 percent to 3 percent but the cuts have been deeper for the small and mid cap stocks as some of them corrected by five to ten percent."

The volatility in the international market like the downfall in crude prices, impending decision of European Central Bank of stimulus and anxiety over China and Japan's support to industry with higher liquidity, had a spillover effect on the Indian markets as well.

For the week ended Dec 12, the FPIs bought stocks in equity and primary markets worth Rs.5,116.42 crore or $826.25 million, according to data with the National Securities Depository Limited (NSDL).

While they sold equity worth Rs.878.79 crore or $141.49 million. The foreign institutional investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

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