The Nifty opened gap down and touched a low of 5,476 in the morning session tracking weak global cues.
Losses in heavyweight Reliance Industries, Infosys and HDFC Bank continued to weigh on the markets.
The Nifty closed near day's low at 5,488, down 59 points and the BSE benchmark, Sensex ended at 18,210, down 223 points.
There was risk aversion towards equities on concerns that US may default on debt, if there is no consensus on raising the debt limit before the August 2nd deadline.Japan's Nikkei Stock Average declined 1.5%, South Korea's Kospi Composite lost 0.8%, Hong Kong's Hang Seng Index ended on a flat note, at 22,571 and China's Shanghai Composite index slipped 0.5%.
European markets also dipped over US debt woes and gloomy earnings report. FTSE 100, CAC 40 and DAX were down between 0.3-1%.
Back in India, the Nifty has lost almost 220 points after it touched a high of 5,700 on Monday, and today the index slipped below the psychological support of 5,500.
Shanu Goel, Senior Research analyst-Bonanza
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