The BSE benchmark sensex continued to decline for the second consecutive week, tumbling by 374 points to two-month low of 18,309.37 on persistent selling pressure after declaration of domestic economic datas amid dashing hopes of a rate cut by the apex bank.
Samajwadi Party's sudden announcement of candidates for 2014 polls also made investors nervous over the current uncertain political situation.
Traders said investor confidence was also hit after the lukewarm response to the 2G telecom spectrum auction raised concerns over the country's widening fiscal deficit. Eurozone debt worries and depreciation of rupee value value above 55-level against dollar also affected the market sentiment.
The Bombay Stock Exchange (BSE) sensitive index moved in a range of 18,750.92 and 18,266.76 before concluding the shortened week at two-month low of 18,309.37, showing a net loss of 374.31 points or 2.00 per cent.
The BSE and NSE were closed for usual trading on November 13 but were opened for Muhurat trading on the same day for 75 minutes in the evening. The market was closed on November 14 for Diwali holiday.
The NSE 50-share Nifty also dropped by 112.20 points or 1.97 per cent to two-month low of 5,574.05.
Investors also appeared to ignore the Wholesale Price Index (WPI) declining marginally to 7.45 per cent in October.
RBI Governor D Subbarao said Friday that at 7.45 per cent inflation is certainly "quite high", indicating no key rates cut in the next monetary policy meeting, which also impacted negatively on the market sentiment.
Traders said after headline inflation fell to an 8-month low in October, investors had hoped for a rate cut. However, Subbarao's comments poured cold water on such hopes, they added.
For the week, the Sensex and the Nifty were down by about 2 per cent also on concerns over the so-called US 'fiscal cliff', worries over India's fiscal deficit and weak macro data, said Dipen Shah, Head of PCG Research, Kotak Securities.
The sentiment remained bearish due to an unexpected 2.5 per cent contraction in September industrial output, marginally high consumer price index at 9.75 per cent and trade deficit widening to an all-time high of USD 20.96 billion as October exports fell to USD 23.2 billion.
The total market turnver at BSE and NSE declined to Rs 9,614.12 crore and Rs 41,035.15 crore respectively from the last weekend's level of Rs 11,383.56 crore and Rs 50,308.36 crore.
Among the major indices the BSE-Auto fell by 2.97 per cent followed by the BSE- Metal 2.71 per cent, the BSE-Capital Goods 2.15 per cent, the BSE-FMCG 2.00 per cent and the BSE-IT 1.51 per cent.
However, the BSE-IPO rose by 7.47 per cent and BSE-Consumer Durable 1.49 per cent.
Foreign Insitutional Investors (FIIs) continued their buying spree by investing Rs 984.71 crores including the provisional figure of Novemver 16.
Major losers from the Sensex pack were Tata Motors (5.56 per cent), Tata Steel (5.25 per cent), ITC (4.83 per cent), Hero Motocorp (4.72 per cent), Hindalco Ind (3.88 per cent), Cipla (3.40 per cent), Icici Bank (3.09 per cent), Wipro (2.99 per cent), Sterlite Ind (2.99 per cent), Jindal Steel (2.98 per cent), TCS (2.98 per cent), Gail India (2.57 per cent) , Larsen (2.65 per cent), HDFC (2.44 per cent), SBI (2.26 per cent), Sun Pharma (2.22 per cent) and Tata Power (2.02 per cent).
However, Bharti Airtel rose by 9.37 per cent and Coal India 1.36 per cent.
Forex: Extending losses for the third straight week, the Indian rupee closed the truncated week down by 41 paise to two-month low of 55.16 against the Greenback on tepid domestic economic data amid sustained dollar demand from importers.
Sharp fall in local equities too added fuel to the fire.
The Forex market was closed on November 13 and 14 on account of 'Diwali' holidays.
Poor industrial production data, record-high trade deficit, sticky retail-level inflation and statement given by RBI Governor D Subbarao Friday regarding economic growth and high inflation dashed hopes of key rates cut by the apex bank in the next monetary policy meeting.
At the Interbank Foreign Exchange (Forex) market, the local unit resumed slightly better at 54.68 a dollar from last weekend's close of 54.75 and immediately touched a high of 54.61.
However, sluggish stock markets amid sustained dollar demand from importers, mainly oil refiners, and weak economic datas pulled the rupee down to a low of 55.2050 before ending the week at two-month low of 55.16, exhibiting a fall of 41 paise or 0.75 per cent.
In straight three week of losing string, the rupee has slumped by 160 paise or 2.99 per cent.
The Indian benchmark sensex, this week, plunged by 374.31 points, or 2.00 per cent, mainly affecting the rupee.
India's exports in October contracted 1.63 per cent for the sixth month in a row to USD 23.2 billion, while imports grew by 7.37 per cent to USD 44.2 billion, putting pressure on the rupee, a forex dealer said.
As global stock markets took a plunge on risk aversion, investors bet on the US currency, driving up the Dollar Index by 0.29 per cent against a basket of six major rivals.