The BSE Sensex fell 2.8 per cent on Wednesday to its lowest close in more than a month as economic jitters swept global financial markets raising concerns about foreign fund flows.

Investors have begun worrying a global economic recovery will not be as quick or robust as many had hoped. Losing stocks outnumbered gainers in the ratio of more than 3:1 in the broader market, while volume was average at 400 million shares.

Financial stocks fancied by foreign portfolio investors led the fall, but auto and cement stocks bucked the trend after auto sales rose for the fifth consecutive month and investors bet on infrastructure spend by the government.

"There is a temporary halt to the fund pouring in from FIIs," said Deven Choksey, chief executive of brokerage KR Choksey, referring to foreign institutional investors. "Global investors are taking money home."

The main stock index dropped 2.83 per cent, or 401.30 points, lower at 13,769.15 points, its lowest close since May 26. Twenty-four components ended in the red. It fell as low as 13,701.76 during trade.

"Global sentiments are negative no doubt, but more than that the market was overdue for a correction," Choksey said.

The benchmark, which has risen in 16 out of the last 17 weeks, has fallen 7.7 per cent so far this week after the budget disappointed investors on Monday. It is still up 42.7 per cent this year.

Foreign funds have put in just $211.4 million this month after net purchases of close to $8 billion between mid-March and mid-June when the benchmark almost doubled.

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