Oil, inflation fears pull down Sensex by 336 pts

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 336.05, or 2 per cent, to 16,907.11, its biggest decline since May 9. All but one of the 30 stocks in the index fell. The S&P CNX Nifty Index on the National Stock Exchange declined 92.20, or 1.8 per cent, to 5,025.45.

"The macro environment is looking pretty gloomy,'' said Jayesh Shroff, who helps manage $7.5 billion at SBI Asset Management Company in Mumbai. "With high oil prices and inflation, the fundamentals don't look that attractive.''

Crude oil rose to a record above $135 a barrel in after-hours trading in New York, prompting increased concern that higher energy costs will stoke prices of goods.

The country's inflation rate, which is at a 3 1/2-year high, is unacceptable and the central bank's aim is to lower it to 3 per cent in the medium term, Reserve Bank of India Governor Yaga Venugopal Reddy said in a speech on May 20.

ICICI Bank fell 3.4 per cent to Rs 880.55. Larsen & Toubro, declined 2.5 per cent to Rs 2,918.35. Indian Oil fell 0.3 per cent to Rs 407. Hindustan Petroleum, slid 3 per cent to Rs 234.85. Bharat Petroleum Corporation, declined 2.9 per cent to Rs 346.85.