Mumbai: The BSE benchmark Sensex continued its slide for the second week in a row, dropping by more than 350 points and touching a three-month low of 16,831 due to persistent selling pressure from operators.

Higher fiscal deficit, rising inflation and lower industrial production data amid sustained fall in the rupee value to sub-53 level, a more-than four-month low, against the dollar mainly affected the market sentiment, a broker said.

Selling was also witnessed on fears of capital gains on investments made last year, which may come under the controversial General Anti-Avoidance Rule (GAAR) - proposed in the 2012-13 Budget. However, according to Finance Ministry officials, GAAR is not expected to come into force with retrospective effect unlike amendments to the Income Tax Act.

The 30-share Sensex resumed higher at 17,195.51 but declined afterwards to close below 17,000 marks at 16,831.08, a net loss of 356.26 points, or 2.07 percent, from its previous weekend's level. The key index had settled at 16,751.73 on January 23, 2012.

The NSE's wide-based Nifty also plunged by 122.15 points, or 2.34 percent, to settle at 5,086.85, a level not seen in more than three months. Auto, capital goods, power, banking, metal, PSUs and realty counters took severe beating.

Banking stocks slumped as the Reserve Bank of India's final guidelines to implement the Basel-III capital rules require banks to steadily build up their capital buffers through March 2018.


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