Sensex sheds 546 points to close below 18K

In the steepest single day fall in 18 months, Sensex plunged 546 points to 17,632.41 as investors dumped stocks on concerns over shooting oil prices due to unrest in the Middle East and inflationary pressures.

Besides, worries over widening current account deficit, rising interest rates and the expiry of monthly derivatives contracts worsened the sentiment.

Sensex and Nifty lost about 3.0 per cent to end the day at nearly 2-week lows.

Continuing political turmoil in Libya and the Middle East has led to investor worries over global economic recovery in view of rising crude oil prices, sending stock markets on a steep slide.

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Brent North Sea crude oil hit 29-month high on Wednesday to nearly $120 a barrel, and the light sweet crude for April deliveries to above $100 mark in New York.

India imports nearly 70 per cent of its oil requirements.

Markemen were concerned that rising oil prices might force RBI to further hike policy rates, pushing up already high interest rates, affecting the bottomline of the companies.

"Market sentiment appears to be extremely fragile amid concerns that the simmering political tensions in the Middle-East and North African would lift crude oil prices further. Any spike in oil prices is bad for the Indian economy as it will adversely affect the already high current account gap," said IIFL Head of Research Amar Ambani.

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The Bombay Stock Exchange 30-share barometer Sensex opened weak and gradually moved downwards to settle the day at 17,632.41, a steep fall of 545.92 points or 3.00 per cent. Previously, it had recorded the biggest fall of 626.71 points in absolute terms after August 17, 2009.

"Markets cracked on the final day of February expiry. Rising Crude oil price due to the unrest in West Asian countries along with the uncertainty over union budget led to selling across the sectors. Indian markets witnessed largest daily fall since August 2009," said Motilal Oswal Securities Manager & Analyst - Derivatives Bhavin Desai.

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Meanwhile, the Asian markets ended lower, with the sole exception of Taiwan, as investors continued to grapple with the unrest in Libya and its effects on the oil markets.

The Hang Seng, Nikkei, Straits Times and Seoul lost in the region of around a percent each.

And European stocks sank for a fifth day, extending the longest losing streak since October, with the FTSE, CAC and the DAX losing up to a percent each.

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On the domestic front, food inflation accelerated in mid-February on rising prices of milk and fruits, amid expectations the government may announce fresh measures to rein in inflation.

The food index rose 11.49% in the week ended February 12 despite policymakers' often repeated projections in 2010 that prices would ease to single digits.

The food price index rose 11.49% in mid February, slightly higher than last week's 11.05%.

The fuel price index climbed 12.14% in the year to February 12, higher than 11.92%, government data showed. And wholesale food prices jumped 15.7% in January compared with 13.6% in December.

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The rate-sensitive banking, auto and realty sectors received a severe battering in this session. Tata Motors plunged by 7.5% at Rs 1058 to top the losers list on the BSE.

Among the other major auto pivotals, M&M skid by 3.7% at Rs 615 and Bajaj Auto slipped bby 2% at Rs 1279.

In the banking space, ICICI Bank weakened by 5.4% at Rs 953, HDFC shed 3.7% at Rs 615 and HDFC Bank lost 2.1% at Rs 2068.

And the auto space saw the likes of DB Realty plunging by 9% at Rs 105, HDIL shedding 5.7% at Rs 145 and DLF losing 3% at Rs 213. And index heavyweight RIL lost 3% at Rs 965.

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The railway stocks had a nervous session ahead of the Railway budget. Texmaco slumped by 3% a Rs 40, Kalindee plunged by 5.7% at Rs 135 and Titagarh Wagons slipped by 8.7% at Rs 381.

Cipla was the only Sensex stock to buck the carnage; the pharma major gained 0.8% at Rs 305.

The market breadth was weak. Out of 2961 stocks traded on the BSE, there were only 62 advancing stocks as against a whopping 2191 declines.