The Sensex tumbled to its biggest fall in nearly seven weeks on concerns over deepening tensions between the Left parties and the Congress on the Indo-US civil nuclear deal and fears of rising prices aired by Reserve Bank of India [Get Quote] Governor YV Reddy.

The Sensex came nearly 20 points close to the 18,000-mark in early trade, buoyed by the Friday's US jobs data, which allayed fears of a slowdown in the world's largest economy.

But the Left's warning of a "political crisis" if the nuclear deal was implemented triggered a huge sell-off, compounded by Reddy's statement later in the afternoon.

The 12-party United Progressive Alliance government depends on the Left for support in Parliament.

The markets fell despite the fact that foreign institutional investors made net purchases of Rs 1,459 crore, taking their net investments this month alone to Rs 7,249 crore ($1.85 billion).

Brokers said they were advising clients to book profits in stocks that had jumped sharply after the US Fed rate cuts on September 18.

"We have advised our clients to be cautious in dealing with equity until the political turmoil abates," said Manish Sonthalia, vice-president, Motilal Oswal.

An executive with a leading FII, however, said funds worth nearly $40 billion were awaiting deployment in emerging markets including India after the Fed rate cut. "We don't see immediate drying up of liquidity," he said.