After opening 137 points lower, the 30-share index continued its slide to touch the day's low of 26,250.24 before ending the day at almost two-month low of 26,271.97, a level not seen since August 14, registering a steep fall of 296.02 points or 1.11 percent.

The gauge had lost 62.52 points in the previous session on Octrober 1. Stock markets remained closed on October 2, 3 and 6 for Gandhi Jayanti, Dussehra and Id-Ul-Zuha, respectively.

FII/FPIs pulled out Rs 63.24 crore from domestic markets on October 1, according to exchange data.

Similarly, the broader-based NSE Nifty closed down by 93.15 points or 1.17 percent at 7,852.40 after shuttling between 7,943.05 and 7,842.70.

Brokers said the sentiment dampened on foreign capital outflows and offloading of positions by retail investors ahead of the earnings season, with Infosys posting results later this week.

Of the 30 Sensex shares, 23 closed lower led by Hindalco (down 4.35 percent), Sesa Sterlite (4.32 percent) and Cipla (3.67 percent), while NTPC, Gail and Tata Motors remained major gainers.

Globally, a mixed closing on the other Asian markets and a lower opening of the European stocks as a report showed German industrial production contracted the most in more than five years, also negatively impacted sentiment.

Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore last Wednesday as per the provisional data released by the stock exchanges.

Sectorwise, BSE metal index suffered the most by falling 2.65 percent, followed by healthcare by 1.85 percent.

Captial goods index by 1.78 percent, Consumer durables index by 1.72 percent, Realy index 1.27 percent, PSU index 1.20 percent and Banking index 0.87 percent.

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