New Delhi (PTI): Increased inflation and slowdown in the US economy are the main reasons for FIIs withdrawing from the Indian bourses, precipitating their fall today even as listing of Reliance Power IPO and SBI cutting lending rates failed to check the slide, ASSOCHAM said.

"Though Reliance Power IPO was listed and SBI decreased PLR by 0.25 per cent, market sentiments remained subdued and showed its reflections in the Indian stocks," ASSOCHAM President Venugopal Dhoot said in a statement.

Indian stock market today plunged 834 points, its third biggest fall in absolute terms. The Bombay Stock Exchange benchmark Sensex ended sharply down by 4.78 per cent or 833.98 points at 16,630.91, its lowest closing this year. It touched an intra-day low of 16,457.74.

Dhoot, however, expressed optimism that the market would move towards corrections after the Budget is presented.

"It is expected that the proposals would support industrial growth and further bring down interest rates, extending relief to the common man. The market would then be able to attract FIIs and public investments," Dhoot said.

Country's largest lender State Bank of India slashed Prime Lending Rate by 0.25 per cent to 12.50 per cent.

The reduction in PLR is likely to moderate lending rates for all category of borrowers, including housing (floating rate), corporate and car loans.