In last two sessions, the Sensex has lost 1,011.79 points.A day after RBI chief's comment over risk of inflationary worries due to deficient monsoon amid global uncertainties, bearish sentiment persisted on economic recovery concerns.

"Several short-term concerns have overshadowed investor sentiments, which have led to the Indian stock market sliding for the second consecutive trading session. Thus, the probability of a rate cut in the next policy meet has becoming much slimmer," said Hitesh Agrawal, Head Research of Reliance Securities.

Frantic unwinding was seen across-the-board with rate sensitive counters hitting hard along-with frontline FMCG stocks. Mid-cap and small-cap too saw large scale selling.

The Sensex after remaining in positive zone briefly at the outset, slipped into the negative zone and dipped below the 27,000-mark to hit a low of 26,698.26.

It settled 351.18 points or 1.29 per cent lower at 26,837.20. This is the lowest closing since May 7, when the index had closes at 26,599.11 points.

Shares of Nestle India saw another session of selling pressure and slumped 9.21 per cent amid growing concerns about safety standards of its popular Maggi noodles.

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