Indian shares plummeted Monday, reversing a more than 1 percent gain made in early trade, on persistent worries that the Reserve Bank of India may further tighten monetary policy to curb higher inflation.

A tepid opening in Europe and a mixed Asian market did nothing to prop up sentiment.

'It was mad-selling today in the market as there was no specific news that has not been factored in -- rising inflation, slowing growth and fears of further monetary tightening,' said Trinadh Kiran, head of e-broking at New Delhi-based Unicon Securities.

'However rollovers into July indicate that investors are positive about the markets and there may be some buying tomorrow after the losses today,' he added.

Kiran anticipates that the Nifty will find support at 4,400 points in a worst-case scenario.

In addition, dealers said there was talk that India's coalition government may lose support from its key communist allies - the Left Front - over the fight against rising inflation, which resulted in panic selling across the counters.

Early in the session, the market reacted positively to local economic data released Friday which showed that the country's GDP grew 9 percent in last fiscal -- second only to China -- helped by unexpectedly high fourth-quarter expansion. Annual GDP growth to March 2008 was lower than the previous year's 9.6 percent but above the government's last projection of 8.7 percent in February.

However, later investors chose to focus on data which showed that annual inflation showed no signs of cooling down. India's inflation - as measured by the Wholesale Price Index (WPI) - rose to a near four-year high of 8.1 percent for the week ended May 17 on a preliminary basis, up from 7.82 percent the previous week.

The main stock index of the Bombay Stock Exchange, the 30-share Sensex, fell 352.39 points or 2.15 percent to 16,063.18, its worst close in about seven weeks after ending at 15,807.64 on Apr. 11. The broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE) pared 130.50 points or 2.68 percent to close at 4,739.60.

All but four benchmark stocks declined led by majority state-owned power producer National Thermal Power Corp. Ltd. (NTPC), which closed 6.39 percent lower at 161.25 rupees. The company Thursday said its fourth-quarter earnings fell 23 percent.

Cement maker ACC Ltd. shed 5.23 percent to 626.10 rupees and Reliance Infrastructure Ltd. retreated about 60 rupees, or 4.90 percent to 1,170.40.

India's biggest software exporter Tata Consultancy Services Ltd. shed nearly 45 rupees, or 4.33 percent, to close at 984.65 while the country's biggest engineering company Larsen & Toubro Ltd. closed 2.18 percent lower at 2,916.25.

Reliance Industries Ltd., the biggest listed company and heaviest Sensex constituent, receded 1.91 percent to 2,355.70 rupees while leading private lender ICICI Bank Ltd. slipped 2.97 percent to 764.85.

Leading carmaker Maruti Suzuki India Ltd. which said Monday that May car sales rose more than 16 percent over the same month last year, gained the most. It closed 2.85 percent up at 786.30 rupees. Diversified group ITC Ltd. closed about 1 percent higher at 219.85 rupees.

All the 13 BSE sectoral indices declined, except the auto gauge ended little changed, up 0.06 percent. The realty index shed about 4 percent.

About 269.7 million shares changed hands in the broader market, with losers outperforming gainers by 2,066 to 600.

Breadth was weak among Nifty stocks too, with only eight advances compared with 42 declines. Aluminium producer National Aluminium Co. Ltd. (NALCO) closed 6.56 percent down at 503.40 rupees. India's leading two-wheeler manufacturer Hero Honda Motors Ltd. was the top gainer, and ended 5.54 percent up at 787.50 rupees after the company Monday said May motorbike sales were up 9.5 percent compared with the same period a year ago.