Five days of sharp losses turned bloody on the sixth day today on the

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markets, with funds and investors pressing the panic button, pulling down the Sensex by nearly 500 points--biggest single-day fall since August.

After a 188 points downside opening, the Bombay Stock Exchange 30-share barometer continued to fall and ended the day crashing 490.64 points or 2.92 per cent to settle at 16,289.82--a low seen last time since November 3 last.

A litany of bad news both onshore and offshore lead to the biggest single-day crash of the market since August 17 last.

While poor Q3 numbers by a string of leading companies dented the investor confidence in those stocks and the resultant selling, the continued bearishness in the global markets also led to heavy selling by funds across the counters, said marketmen.

Marketmen also attributed the panic selling to unwinding of long positions by wary operators ahead of the expiry of the January contracts tomorrow.

The forthcoming credit policy, which is expected to announce some measures to contain the spiralling infliction, also weighed on interest-sensitive sectors like realty, autos and banking, leading to heavy selling in them, said marketmen.

However, Religare Securities president-equity broking Ashu Madan said, "the crash was on the expected line as a correction was due in the market after the huge rally of the past two-three months. Also, when there is no bad news, the fear factor comes to play--a fear that market may correct further made more pressure on the market and hence the crash."

Markets @ 12.30 PM

The Bombay Stock Exchange benchmark Sensex today fell sharply by 337 points at mid-session on heavy selling by foreign funds ahead of settlement in derivatives segment amid weakening global trend.

The 30-share index declined by 337.89 points to 16,442.57 points at 1230 hrs as brokers and funds off-loaded positions in realty, auto and metal stocks.

The wide-based National Stock Exchange index Nifty fell below psychological level of 4,900 points by losing 110.40 points to 4,897.50 points. It commenced the day below 5,000 points level.

Marketmen said trading sentiment remained bearish in line with subdued global markets on reports that China may impose further measures to squeeze money supply.

The Tokyo Stock Exchange's benchmark Nikkei-225 closed lower 0.71 per cent as a stronger yen weighed on exporters. The US stock markets had closed marginally lower last night.

Markets @ 10.00 AM

The BSE Sensex dropped more than 1 percent on Wednesday morning, on track for a sixth straight loss as the market caught up with a slide in global shares as trade resumed after a holiday, with financial shares leading the fall.

Sector leader State Bank of India fell as much as 4.2 percent to a four-month low as investors worried about its outlook and asset quality after it reported December quarter results on Monday evening.

State Bank 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.

In a report, Deutsche Bank said State Bank's asset quality was still not comfortable though not alarming, and said the bank was likely to face back-ended profit pressures in the process of raising provision coverage to the mandated level.

The bank maintained a "sell" rating on State Bank.

"When bad news is already around, more bad news just adds to the woes. Positives are ignored for a while," said Daljeet Kohli, head of research for private client group at Emkay Global.

"It is fear psychology which is playing right now," added Kohli.

At 10:03 a.m. (0433 GMT), the 30-share BSE Index was down 1.07 percent at 16,600.81, with only six of its components advancing.

It has fallen 4.9 percent over the previous five sessions, and traded at its lowest in two months on Wednesday morning.

State Bank was down 3.7 percent to 2,015 rupees while top private lender ICICI Bank had fallen 2.5 percent to 810.45 rupees.

Software companies extended losses, on fears U.S. President Barack Obama's plan to limit risk-taking by banks might hurt their order flow.

Infosys Technologies and Tata Consultancy Services declined nearly 1 percent and 0.1 percent respectively, while Wipro shed 0.8 percent.

In the broader market, gainers outpaced losers in a ratio of 2.1:1 in a volume of 89 million shares.

The 50-share NSE index was down 1.2 percent at 4,947.40.

STOCKS ON THE MOVE

* Aluminium producer Hindalco was down 2.9 percent at 154.50 rupees. It said its December quarter net profit dipped 22 percent and missed the street view.

* Top-listed realty firm DLF was down 2.5 percent at 335.50 rupees ahead of its December quarter results.

* Top consumer goods maker Hindustan Unilever dropped 2.6 percent to 257.10 rupees, it reported a 5.4 percent quarterly rise in net profit, helped by property sales and the transfer of assets.

* Godrej Industries was up 4.1 percent at 158.85 rupees. The diversified firm posted a standalone net profit for the December quarter, compared with a loss a year ago.

MAIN TOP 3 BY VOLUME

* Suzlon Energy on 2.8 million shares

* Mahindra Satyam on 2.4 million shares

* National Fertilisers on 2.1 million shares

Markets @ 09.00 AM

The Bombay Stock Exchange benchmark Sensex today fell by 188.51 points, or 1.10 per cent, in opening trade on selling by foreign funds driven by weak trends in the overseas bourses.

The 30-share index, which had lost over 860 points in the past five sessions, fell by 188.51 points to 16,591.95 points. Banking, technology and metal sector stocks were under pressure, dragging the Sensex down.

The wide-based National Stock Exchange index Nifty dipped below 5,000-point level losing 63.15 points, or 1.26 per cent, to 4,944.75 points.

Brokers said sentiments on the domestic market remained bearish in line with subdued global markets on reports that China may impose further measures to squeeze liquidity.

Besides, tomorrow's monthly expiry in the derivatives segment also cast its shadow on the sentiments as participants were seen off-loading their positions, they added.

Among major losers, Reliance Industries down by 0.08 per cent to Rs 1,040.90, Infosys by 0.90 per cent to Rs 2,515, TCS by 1.16 per cent to Rs 747, Wipro by 1.28 per cent to Rs 685.80, State Bank of India by 2.36 per cent to Rs 2,044, ICICI Bank by 2.18 per cent to Rs 813.50, HDFC Bank by 1.07 per cent to Rs 1,639.65 and Sterlite by 1.55 per cent to Rs 790.