Prospects of a hung Parliament and possible slowing down of economic reforms played havoc on public sector scrips, particularly those in the oil sector, as the PSU index plummeted by over 5 per cent.

The rout of Chandrababu Naidu in Andhra Pradesh, considered one of the most reform-savvy chief ministers, left punters nervous on the future of economic reforms, especially on privatisation of blue chip state firms, and what followed was a free fall in PSU shares.

Heavy selling was witnessed in almost all oil scrips with Indian Oil Corporation falling by about 10 per cent and privatisation-bound Hindustan Petroleum Corp dropping nine per cent with Bharat Petroleum Corp down by over eight per cent.

Oil and Natural Gas Corp, Gas Authority of India, IBP and the recently-listed Petronet LNG also closed substantially lower than Monday's price.

Tuesday's fall in PSU index was the second largest since the polling began on April 20. The index lost over 7 per cent during the last three trading days.

Other privatisation-bound state firms like Hindustan Copper (6.25 per cent), EIL (3.22 per cent), Shipping Corporation (6.58 per cent), Nalco (5.03 per cent) and STC (6.89 per cent) also nosedived on nervousness on the fate of the divestment programme.

BHEL was quoted lower by over 4 per cent while Mahanagar Telephone Nigam was down by 4.87 per cent.

Market watchers expect the fall in PSU scrips to continue till a clear picture emerges on the political front.