Despite the fall, the Sensex is up 31.5 per cent from a three-year low of 7,697.39 hit on Oct. 27, but is still down 50 per cent in 2008. The 50-share NSE Nifty index was down 4.68 per cent at 2,994.95.

Buoyed by gains in global markets and the US presidential election, the market had risen nearly 3 per cent in opening deals. Shares in the Reliance, India’s most valuable listed company, plunged 12.76 per cent to Rs 1,269.45 on foreign fund selling. Despite the fall, Reliance shares are still up 36.5 per cent from an Oct 27 low of Rs 930, which was its weakest in more than two years.

Telecom stocks fell on concerns that a government move to charge more for radio spectrum may hurt earnings. Sector leaders Bharti Airtel and Reliance Communication fell 4.5 per cent and 9.5 per cent respectively.

State Bank of India fell 3.6 per cent, and rival ICICI Bank lost 1.6 per cent, trimming gains made since the central bank cut its key lending rate and banks’ reserve requirement at the weekend. “The selling looks like profit booking after the rally in the past 4-5 days. Stocks in construction, realty, metals had seen a strong bounce back. There may be weakness for another 1-2 sessions,” said a fund manager.

Tata Motors closed down 6.5 per cent at Rs 181.20. The company said its commercial vehicle plant at Jamshedpur would be closed for three days this week to avoid a build up of inventory.

Kingfisher Airlines fell 16.6 per cent. A state court issued a stay on attempts by lessor GE Commercial Aviation Services to repossess four A320 aircraft from Kingfisher for default on rentals.

Meanwhile, the rupee closed at 47.46/50 per dollar, 0.5 per cent stronger than 47.69/70 at close on Tuesday. In early trade, the local unit touched 46.70, its strongest since October 2, as it extended a recovery from a record low of 50.29 on October 27.

The rupee is still down 17 per cent in 2008.