In choppy trade, the Bombay Stock Exchange benchmark Sensex today fell by nearly 70 points to extend losses for third straight session with investor sentiment remaining dampened.
The 30-share Sensex declined by 69.91 points to close at 16,283.49. The key index has lost over 450 points in the last two sessions.
The wide-based National Stock Exchange index Nifty also fell by 20.55 points to 4,826.15.
Traders said market extended its losses on concerns that the government might halt stimulus spending as the central bank tightens monetary policy.
Banking stocks got another thrashing today and sectoral index closed down by 1.50 per cent.
Brokers said four per cent rise in September in key infrastructure industries compared to healthy 7.1 per cent in August have raised doubts if industrial recovery is sustainable or not.
Shares of ICICI Bank, the second-biggest lender in the country, declined by 3.12 per cent to Rs 810.20, HDFC Bank by 3.11 per cent to Rs 1,618.90 and HDFC Ltd. by 3.23 per cent to Rs 2,667.
A weak global trend partly influenced the trading sentiment and investors offloading part of their holdings ahead of the October month contract expiry in derivatives segment tomorrow further sparked selling.
However, the market received some support after the Sensex heaviest Reliance Industries rose 2.28 per cent to Rs 2,035.65 after the government selected customers for increased output from a gas field.
Infosys Technologies rose by 0.55 per cent to 2,256.85 on expectations that the rise in the US currency against the rupee would boost revenue of software exporting companies.
Over 50 per cent of the revenue of software exporting companies comes from the US markets.
Stocks have fallen the past two days on concern the RBI will raise interest rates to combat rising prices.
The consumer durable sector index suffered the most by losing 1.79 per cent to 3,374.94 followed by banking index by 1.54 per cent to 9,533.66. PSU index fell by 1.15 per cent to 8,557.81 and Auto index by 0.94 per cent to 6,291.89.
The market savers were realty, oil and gas, teck, capital goods and information technolgy segments.