The NSE S&P CNX Nifty fell 72.20 points, or 2.62 per cent, to 2,682.90. The Sensex had ignored terror attacks and gained 66 points on Friday.

After an initial surge triggered by a reshuffle of key government posts on Sunday, the market pared gains in mid-morning trade as a survey showed fall in India’s manufacturing output in the month just gone by. The market firmed up again in early afternoon trade but it shortly pared gains following reports that exports had fallen 12.1 per cent in October. From that low, the market once again firm up in afternoon trade but declined as European markets showed losses.

“The markets opened in green on the back of political restructuring that happened during the weekend which brought expectation of newer policies to help the markets but weak European markets, negative US index futures and weak economic data pulled down the market from the highs draining away all the gains of the day and closed in the red,” said an analyst with Geojit Securities.

What upset the marketmen most is the fall in exports, the first year-on-year fall in nearly three years, as slowing output at home and weakening economies in key overseas markets slashed demand.

Further, a survey showed India’s manufacturing output shrank for the first time in 3-1/2 years in November 2008 as credit conditions tightened and the global financial crisis hurt sentiment and reduced demand.