Sensex closes 240 pts down on fears of China-led slowdown

The Sensex closed 0.88 per cent down on Friday, as fears of a China-led deceleration in global growth and escalating tension between South Korea and North Korea gripped markets.

Global stock markets tumbled after a survey showed Chinese factory activity contracted at their fastest pace since the depth of the global financial crisis in 2009.

The rupee too touched a low of 65.90 per dollar, the lowest since September 2013, tracking selloff in other Asian currencies.

"We've broken crucial levels, we could see a small pullback next week but sustainability is going to be a big question mark," said Gaurang Shah, vice president at Geojit BNP Paribas.

"No positive news flows either from global or local markets should keep the markets suppressed."

The Sensex closed 0.88 per cent or 241.75 points down at 27,366.07 while the Nifty closed 0.87 per cent or 72.80 points down at 8,299.95.

Almost all sectors languished in the red, with financial and auto and auto-ancillary stocks suffering the biggest cuts.

Housing Development Finance Corp fell 1.57 per cent, HDFC Bank dropped 1.27 per cent and ICICI Bank declined 0.74 per cent.

Tata Motors fell 2.73 per cent, extending losses into a second session, after the company said some Jaguar Land Rover vehicles may have been damaged in the Tianjin explosions on Aug. 12.

Meanwhile, Infosys gained 1.09 per cent on short-covering.