Sensex falls 350 points, Nifty below 5600

The BSE Sensex fell over 1.7 per cent and the Nifty traded down 1.9 per cent on Tuesday. The Sensex traded below the psychological 19,000 mark, while the Nifty slipped below the key 5,600 levels.

A test of 5,600-5,550 levels could open up serious downsides for markets, market analyst Sarvendra Srivastava told NDTV.

"The selling seems to be relentless and if these levels (5,600-5,550 are breached), the Nifty can fall another 300 points," Mr Srivastava said.

Markets are on track for their ninth loss in ten sessions amid a sharp plunge in the rupee. The Nifty has shed over 400 points in the last ten sessions.

Banks led the fall on continued uncertainty about how long would the Reserve Bank keep its liquidity tightening measures as the rupee hits a record low.

India's Reserve Bank has tightened liquidity to defend the rupee, but the continued weakness in the currency may push the central bank to hike long term interest rates to attract foreign capital. That will hurt banks because the risk of defaults on current loans will rise.

HDFC Bank fell 4 per cent while ICICI Bank traded down 3.5 per cent.

Bharat Heavy Electricals extended losses falling 4 per cent. The company's quarterly profit dropped 49 per cent on sharply lower sales in its power and industry businesses in a slowing economy. Tata Power posted net loss of Rs 115 crore, falls 8 per cent.

(With inputs from Reuters)