In its biggest drop in over two months, the benchmark Sensex on Thursday plunged by 406.08 points on heaving selling triggered by fresh fears that US Fed would begin tapering its economic stimulus earlier than expected.

In step with local stocks, rupee plummeted to 62.97 versus the US dollar, raising the risk of higher import costs for the Indian economy.

Tracking overnight losses in US market, the Sensex opened the day lower at 20,579.26 and stayed in the negative terrain throughout.

It touched a low of 20,189.23 intra-day, before finally closing at 20,229.05, down 406.08 points — its biggest loss since September 3 when it fell 651.53 points.

The Sensex had lost 256 points yesterday. All the 30 constituents of Sensex today closed lower.

ITC, HDFC and RIL dragged it down while Sesa-Sterlite, Jindal Steel, Tata Power and Bhel were the biggest laggards.

In the broader market, all 13 BSE sectoral indices closed in red. Banking, capital goods and realty were the worst hit.

On similar lines, the broad-based National Stock Exchange index Nifty fell below 6,000 level to end lower by 123.85 points, or 2.02 per cent, at 5,999.05.

Also, SX40 of MCX Stock Exchange fell by 237.62 points to end at 12,008.28. Yesterday’s release of the minutes of Fed’s October meet spooked global markets as it signalled tapering of the USD 85 billion monthly bond buying could happen “in coming months” if the economy improves as anticipated.

A survey pointing to a weaker-than-expected pace of growth in Chinese manufacturing activity also hit Asian shares, raising doubts over the recent economic recovery.

Foreign funds bought Indian stocks worth Rs 80.4 crore yesterday, compared with over Rs 1,014.6 crore buying on Tuesday.