A slump in commodity prices sparked fresh concerns over the health of the global economy, roiling equity markets across the world.
Base metals, oil and shares of commodity companies touched fresh multi-year lows, raising worries among investors that stimulus packages had done little to stem the global economic slowdown.
The sell-off in commodities comes when the US Federal Reserve is widely expected to increase interest rates next month.
The Bloomberg Commodity Index, which tracks a basket of 22 commodities, fell to its lowest level since 1999. Global gold prices traded near a five-year low, heading for a fourth week of losses, while the London Metal Exchange index of six metals, including copper, dropped to its lowest since 2009. Brent crude oil prices, which fell to a three-month low of $44 a barrel on Thursday, continued to trade weak on an unexpected rise in inventories in the US. (MARKET FALLS)
Copper tumbled to $4,872 a tonne, its lowest since July 2009, on Thursday. Copper prices are down 27.53 per cent so far this year on falling demand from China, which takes 45 per cent of global consumption.
The softness in commodity prices hit stocks of metal and mining companies, which extended their losses for a fifth week.
The benchmark Sensex fell 256.42 points, or 0.99 per cent, to close at 25,610.53, lowest since September 11. Commodity companies, including Vedanta (4.2 per cent), Hindalco (3.3 per cent) and ONGC (3.3 per cent) led the fall.
Most global markets traded weaker with benchmark Chinese indices declining about two per cent and other Asian markets dropping between 0.5 per cent and one per cent. The European markets on opening were trading 0.5-1 per cent lower, while the US market overnight posted a 1.5 per cent drop.
"Sluggish demand from China and fears of further price declines following the US interest rate hike in December are the two reasons for the sharp decline in commodity prices. The decline is likely to continue until the Chinese economy rebounds and the Fed decides on the interest rate," said Gnanasekar Thiagarajan, director, Commtrendz Research.
Following copper, zinc and lead also hit their respective lowest levels in six and five years. Nickel is down 37 per cent so far in 2015, while zinc, tin and copper have lost 28 per cent, 25 per cent and 23 per cent, respectively.
Base metal prices had declined on China woes during the July-September quarter as well, but there were expectations that the worst was over as the Chinese government rolled out stimulus measures. During the week, a raft of poor economic data from China had raised concerns over a slowdown in the world's second-biggest economy and the global engine of growth. China's copper imports also declined 4.2 per cent year-on-year to 3.82 million tonnes for the first 10 months of 2015.
"The scenario is different this time as major metal producers led by Glencore and Alcoa have announced production cuts. The world market could return to a deficit in 2016 from a surplus this year. So the second half of 2016 could see a bounce back in metal prices," added Thiagarajan.
"Copper prices are likely to trade lower as latest comments by Fed Chairperson Janet Yellen on a possible rate hike will keep investors cautious. Also, persistent weak data from China will bother metals going forward," said Prathamesh Mallya, senior research analyst, Angel Commodities Broking.
Brent touched $43.50 a barrel, its lowest since August 26, as inventories rose by 4.2 million barrels against expectations of a million barrels.