Sensex drops 240 points to its lowest close since Dec. 8, worries over corporate earnings deepen

The 30-share prime index opened higher at 9638.83 and touched the day's high of 9706.38 during early morning trade but failed to maintain its rally, slipping to a low of 9294.98 as the day proceeded. However, decline in inflation rate to a new 9-month low sparked hopes of another round of rate cuts and helped the market barometer trim its losses before close of trade.

Following Friday's decline, the benchmark index is down about 54.7 percent this year, making it one of the worst performing markets in Asia.

Twenty-five components closed in the red. The day's top villains were private sector utility major Reliance Infrastructure and real estate giant DLF, which plunged 6.10 percent and 5.97 percent to Rs.542.30 and Rs.274.4 respectively.

Technology outsourcers Infosys Technologies, Wipro and TCS tumbled 5.33 percent, 2.30 percent and 1.24 percent respectively on growing concerns that global economic slowdown would prompt their clients to cut down on IT budgets.

Financial stocks ICICI Bank, State Bank of India and HDFC Bank declined 5.17 percent, 3.28 percent and 1.38 percent respectively.