The BSE benchmark sensex snapped its last three-week gains by slipping sharply by 403 points on fresh all-round selling by operators and investors in view of completion of August contract and global economic worries.

Markets across the globe were gripped under selling pressure on worries about the pace of the economic recovery in the US, the world’s biggest economy.

The BSE sensex fell below the 18,000 mark while the S&P CNX Nifty retraced from 31-month high.

Volatility was high during the week as traders rolled positions in the derivatives segment from the August 2010 series to September 2010 series.

Approval of net set of direct tax rules by the Union Cabinet also affected the market sentiment.

As per the new rules, income tax exemption limit rises from 1.6 lakh to 2 lakh, leaving more money in the hands of individuals, and a lower tax rate for companies.

However, the government proposes to raise the minimum alternate tax (MAT) on book profits to 20 per cent from current 18 per cent.

The government also announced a bagful of stimulus measures in the latest review of the Foreign Trade Policy to spur exports.