With today's 41.84 points drop, the 30-share barometer has plunged around 1,370 points, or 4.91 percent, in six days.

The market has been on a downward spiral since last Tuesday when Reserve Bank had cut repo rate by 25 bps, despite flagging concerns over economic recovery.

On the same day, the Met Department had forecast monsoon to be deficient this year, triggering drought fears.

"Markets continue its southward journey in line with the foreign portfolio investor sell off. Fears of lowering of weightage of India on the MSCI index also spooked the sentiment," said Gaurav Jain, Director of Hem Securities.

Shares of realty, healthcare, IT and auto sectors were the major losers of the day. Falling for the seventh straight day, the broad-based NSE Nifty fell by 21.75 points or 0.27 percent at 8,022.40.     

In volatile movements, Sensex shuttled between 26,438.32 and 26,604.65 during the day and finally ended 41.84 points or 0.16 percent lower at 26,481.25.

This is the fresh lowest closing in nearly eight months. Foreign investors are cautious in anticipation of a rate hike by US Fed and the inclusion of Chinese A shares in the MSCI emerging markets index, which could see foreign investors making a run for Chinese markets, traders said.

Shares of Nestle India, after remaining under pressure for the four straight sessions, emerged surprised winner today trading largely on the back of value-buying and climbed 7.47 percent to close at Rs 5,953.80.

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