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The S&P BSE benchmark Sensex ended lower by 531 points to 20,666.15 during the week under review after touching an all-time high of 21,321.53 during the first day of the Samvat year 2070.
Profit-booking from operators after cautious stance from Global rating agency Standard and Poor as well as weak service sector activity in last month pulled the Sensex down.
India's services sector contracted for the fourth successive month amid economic uncertainty. The HSBC/Markit purchasing managers' index for the services industry was at 47.1 in October from 44.6 in September. An index value of below 50 indicates contraction.
The Sensex resumed higher at 21,278.08 and rose to its all-time high level of 21,321.53 during Muhurat trading due to persistent foreign inflows as well as confidence given by the Finance Minister P Chidambaram that the country's current account deficit will be contained below USD 60 billion in current financial year.
But, it declined afterwards to 20,600.90 before ending the week at 20,666.15, showing a loss of 530.66 points or 2.50 per cent on fears of downward ratings by S&P.
The NSE 50-share Nifty also dropped by 166.45 points or 2.64 per cent to end at 6,140.75.
Banking stocks suffered the most led by heavyweight SBI which tumbled by 7.19 per cent following its decision to hike lending rates by 0.20 per cent.
However, IT shares firmed up on account of stronger than expected results from Cognizant and a weak rupee that fell below 62-level against the US dollar.
A weak rupee and tepid global cues ahead of US GDP growth data and European Central Bank's rate decision also affected the domestic market sentiment.
"Markets will watch out for the remaining quarterly results in the next week. Early next week, markets will also focus on the outcome of China's Plenum, where significant reforms measures are expected," said Dipen Shah, Head of Private Client Group Research at Kotak Securities.
Meanwhile, foreign institutional investors continued their buying spree by investing net Rs 1,588.73 crs during the week including the provisional figure of November 8.
24 scrips out of the 30-share Sensex ended in red while only six scrips finished in green.
Other major losers were ICICI Bank (7.38 pct), Bharti Airtel (6.08 pct), Bharat Heavy Electricals Ltd (BHEL) (5.58 pct), Housing Development Finance Corporation Ltd (HDFC) (5.41 pct), M&M (4.96 pct), HDFC Bank (4.48 pct), Hindustan Unilever