The Bombay Stock Exchange (BSE) Sensex fell for a sixth session on Wednesday, sliding 2.9% to its lowest close in nearly 12 weeks, as investors joined a regional sell-off on concerns China’s efforts to cool credit demand could hurt global recovery.

Financial stocks led the drop on caution ahead of the Reserve Bank of India’s (RBI) monetary policy on Friday that is widely expected to tighten banks’ reserve requirements. The Sensex dropped 2.92%, its biggest one-day fall in nearly three months, and ended down 490.64 points at 16,289.82.

Only one of its components closed in the green. It posted the longest run of losses in nearly three months and matched a six-day slide to early November last year.

AV Srikanth, executive director, Anand Rathi Financial Services, said the market was catching up with falls in Europe and Asia since Tuesday, when the domestic bourse was closed for Republic day.

Global stock markets fell again on Wednesday as investors were worried about a monetary squeeze from central banks around the world and also the impact of tightening US banking regulation.

State Bank of India (SBI) fell 5.7% as investors worried about its outlook and asset quality after it reported December quarter results on Monday. SBI said it expected steady loan growth for the full year but warned that surplus deposits and higher bad debt could impact profits in the March quarter.

SBI lost 5.1% at Rs 1,987.15, while rival ICICI Bank dropped nearly 5% to Rs 790.20. Metals makers fell as an appreciating dollar and on worry further policy tightening in China and proposed US bank regulations could stifle demand for metals.

Tata Steel dropped 8.5% to Rs 558.70 while non-ferrous metals producer Sterlite Industries shed 4% to Rs 770.05. Hindalco fell 5.7% to Rs 150.10.

Export-focused outsourcers declined on fears US President Barack Obama’s plan to limit risk-taking by banks might hit their order flow. Infosys Technologies and Tata Consultancy Services lost 1.6% each, while Wipro shed 5.8%.
Reliance Industries, which has the highest weightage on the main index, closed 1.5% lower at Rs 1,025.85.

On the BSE, around eight shares declined for every one share that gained on volume of 444 million shares, lower than last week’s daily average of 534.4 million. The NSE Nifty closed down 3.1% at 4,853.10.

DLF fell 7.8% to Rs 317.05 ahead of its December quarter results due after market hours. HUL dropped 1.7% to Rs 259.30.

It had reported a 5.4% quarterly rise in net profit, helped by one-time property sales and the transfer of assets.
Top utility vehicles and tractor maker Mahindra & Mahindra extended losses and closed 5.6% lower at Rs 1,011.90. The company had said on Monday rising input costs and the possible end of stimulus spending could hurt its growth, even as it reported a near-tenfold rise in profit.