Sensex ends below 17000 as Dow futures kill hopes

Indian shares finished lower in a see-saw session, driven by the changing trends in markets across the globe. Benchmark indices had almost erased the losses for the day when renewed selling in Dow futures and key European markets sent bulls running for cover.

The 30-share Sensex closed at 16,990.18, down 315.69 points or 1.82% below its previous close, after touching a low of 16,759.45 earlier in the session. The 50-share Nifty shed 88 points or 1.69% to close at 5,123.25, after touching an intra-day low of 5,054.05.

Adding to the already gloomy mood was rating agency S&P's statement that it could lower the sovereign ratings of countries like India, Japan and Malaysia.

''The implications for sovereign creditworthiness in the Asia-Pacific would likely be more negative than previously experienced and a larger number of negative rating actions would follow,'' S&P said in its report on Asia-Pacific Sovereigns.

Brokers said foreign institutions were not heavy sellers at least during the early part of the day. Realty, IT and metal shares took a beating, while auto, pharmaceutical and FMCG shares fared better even as every sector closed in the red. With today's decline, the Sensex and Nifty have dropped almost 7% in the last 6 trading sessions.

A relief rally is overdue, but given the steady stream of negative news from the US and Europe, traders are nervous. Much will depend on how the situation in these economies plays out over the next few days.