Sensex closes 586 pts down, Nifty slips below 7,800

The slide in Asian markets and below-expected GDP data sobered investor sentiments in the Indian equities markets on Tuesday, leading benchmark BSE Sensex to close 586 points down.

The Nifty closed more than 2 per cent down on Tuesday after HDFC Bank lowered its base rate by a hefty 35 basis points, sparking concerns if other lenders would follow suit, hurting margins in the sector.

The broader index fell below the key 7,800 mark, ending 2.33 per cent lower, not far from levels last week when the index hit its lowest since August 2014.

The benchmark BSE Sensex ended down 2.23 per cent. The S&P BSE Sensex which opened at 26,127.04 points, closed at 25,696.44 points, down 586.65 points or 2.23 percent from Monday's close at 26,283.09 points.

The Sensex touched a high of 26,141.07 points and a low of 25,579.88 points in the trade.

The Bank Nifty fell 3.59 per cent.

Foreign investors pulled out a record $2.55 billion from Indian markets in August, the highest ever monthly outflow at least since 2002 as per regulatory data.

"The volatility in the markets is largely because of factors outside the control of market participants in India," Deven Choksey, managing director, KR Choksey Securities said.

Financial and bank stocks took a beating, with Housing Development Finance Corp falling 2.76 per cent and HDFC Bank losing 2.68 per cent, while Axis Bank declined 5.24 per cent.

Blue chip stocks such as ITC fell 3 per cent, while Larsen & Toubro lost 2.92 per cent.

A spike in crude oil prices on Monday led to selling pressure in stocks such as Reliance Industries, down 1.94 per cent, and Coal India, down 2.99 per cent.

Meanwhile, state-owned Punjab National Bank fell 6.94 per cent after Fitch downgraded its viability rating by one notch to 'bb'.

(Reporting by Keren Rebelo)