Sensex dips below 17,000 after four months

Falling for the third session in a row, the BSE benchmark Sensex on Friday closed 320 points down, slipping below the psychologically important 17,000 levels amid heavy selling by foreign funds due to fresh concerns over the Mauritius tax treaty review and a weak rupee.

The 30-share Sensex, which had lost 168 points in last two trading sessions, plunged further by 320.11 points, or 1.87% to 16,831.08, its lowest level since January 30.

Similarly, the 50-share NSE Nifty dropped by 101.55 points, or 1.96% to 5,086.85 led by a steep fall in stocks of capital goods and banking sectors.

Brokers said the Indian rupee plunging to fresh four month low, spur concerns the government might find it hard to cool inflation and curb the fiscal deficit.

The rupee slid as low as 53.84 per dollar, the weakest since December 15, lifting the cost of imported oil, fueling inflation and reduce scope to cut interest rates.

A weak trend in the Asian region and lower opening in Europe ahead of US jobless data and elections in France, Greece, Italy and Germany this weekend, further fuelled the selling pressure.

The domestic stock market received another jerk as Reliance Industries dropped by 1.68% to Rs726.45 following reports that Oil Ministry has hiked the penalty for falling natural gas output from KG-D6 fields.

Infosys dropped by 1.74% to Rs2,441.15 on fears Eurozone debt crisis might affect revenue of software exporting companies. IT companies get more than 50% of their revenues from the US and Europe.

The BSE Capital Goods sector index suffered the most by losing 3.74% to 8,908.74 followed by BSE Banking index that closed 3.17% down at 11,284.03.