Indian stocks continued their downhill journey on Tuesday, joining other world markets where investors

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shifted to safer assets like gold.

The benchmark Sensex plunged by 491.34 points, or 3.09 per cent, to 15,404.94 — the sixth straight session of fall for the index and its longest losing streak this year. With Tuesday’s fall, Sensex has wiped off 1,917.88, or 11.07 per cent, from its recent peak of 17,322.82 on October 17 — the muhurat trading session.

The market capitalisation of Indian stocks fell by a whopping Rs 66,57,440 crore in 11 sessions from the special Diwali trading session. On Tuesday alone, the market lost Rs 1,74,118.01 crore.

Real estate (down 9.76 per cent), metals (5.95 per cent) and oil & gas scrips (3.49 per cent) fell the most. BSE Small Cap Index lost 4.5 per cent.

“A correction of 15-18 per cent from peak (during a short span of time) is not unheard of in our markets,” said Ved Prakash Chaturvedi, managing director of Tata Mutual Fund. “It is difficult to predict if the correction is over. But, there is a fair amount of money waiting in the sidelines, and this will come in when the correction is done.”

Nifty fell to 4,563.90, down 147.80 points or 3.14 per cent, from the previous close. This is the first time since September 3 that the index is closing below 4,600.

The December contract for gold on the Multi Commodity Exchange rose to Rs 16,248 ($345.7) per 10 gm, erasing theprevious high of Rs 16,173 on Monday as the Reserve Bank of India purchased 200 tonnes of the metal from the International Monetary Fund.

“Global cues were weak, and this is impacting our markets,” said Ranjit Kapadia, head of institutional equities, HDFC Securities.

The news from the UK that Royal Bank of Scotland Group and Lloyds Banking Group will receive 31.3 billion pounds ($51 billion) in a second bailout from the government indicated the global financial crisis is far from over, keeping investors nervous across the globe.

The MSCI World Index of 23 developed markets sank 1 per cent at 12:21 pm in London and futures on the Standard & Poor’s 500 Index decreased 0.9 per cent. Hang Seng fell 1.8 per cent and South Korea’s Kospi lost 0.6 per cent. Foreign Institutional Investors, who were big buyers in India since April, sold a net of Rs 874 crore worth stocks. Domestic institutions, however, bought just over Rs 751 crore worth stocks.

“Life Insurance Corporation of India was a big buyer today,” said a dealer.

A total of 453 stocks hit the lower circuit on Tuesday on heavy selling. Hindalco lost 10.50 per cent to Rs 109.15 due to fall in copper prices and 52 per cent drop in its net profits in second quarter. Other major losers on 30-share Sensex were DLF (down 9.04 per cent), Jaiprakash Associates (7.52 per cent to Rs 194.35), Sterlite Industries (6.40 per cent to Rs 722.15) and ACC Ltd (6.20 per cent to Rs 701.30). Reliance Industries lost 5.73 per cent to Rs 1,820, while Anil Ambani’s Reliance Communications ended lower by 5.71 per cent to Rs 165.90.