The Sensex, which fell for the third straight day, dropped by 179.79 points to 8,427.29, after dipping to the day's low of 8,390.21 as the funds remained net sellers in heavyweights led by consumer durables and banking.

The key index had closed around these levels of 8,308.93 on November 10, 2005.

Similarly, the 50-share National Stock Exchange index Nifty dropped by 52.20 points to 2,622.40, after dipping to a lowest level of the day at 2,611.55 points.

Brokers said the fresh meltdown was solely on deepening concerns about the global economic outlook and wobbly world stock markets dented investor appetite.

They said the US market falling below 12-year-low levels and cracking the psychological 7,000 points level mainly shattered investors' hopes for any immediate recovery.

The US Standard & Poor’s 500 Index tumbled 4.7 per cent to its lowest close since October 1996. The US government announced last Friday that gross domestic product (GDP) shrank at a worse-than-expected 6.2 per cent in the fourth quarter of 2008, raising renewed fears about energy demand in the world's biggest economy.

Brokers said the rupee falling to record low levels against the US dollar also prompted foreign funds to pull out of bourses.

While a sharp plunge in exports in January weakened sentiment, the deepening global financial crisis dampened trading activity in software exporting units led by Infosys Technologies as American International Group's record loss worsened investor confidence. Over 50 per cent of India's software business revenue comes from the US markets.

The IT sector index fell by 1.86 per cent to 2,019.24 after Infosys, the second-largest software exporter, fell 1.74 per cent to Rs 1,197.60, Tata Consultancy Services, the largest software exporter, by 3.12 per cent to Rs 445.15, and Wipro, third, dropped 1.16 per cent to Rs 200.50.

The consumer durable sector index fell the most by 3.15 per cent to 1,496.33, followed by the FMCG index by 2.59 per cent to 1,941.07.

The teck index dropped by 2.15 per cent to 1,656.61, the bank index by 2.10 per cent to 3,949.08 and the oil and gas index by 1.88 per cent to 5,775.75.

The power index fell 1.81 per cent to 1,671.38, the metal index 1.46 per cent to 4,423.14, the capital goods index 1.44 per cent to 5,644.14, the PSU index 1.42 per cent to 4,786.11, the auto index 1.41 per cent to 2,618.18, the healthcare index 1.23 per cent to 2,554.39 and the realty index 1.03 per cent to 1,365.60.