Mumbai, Aug 24 (IANS): Weak global cues and a steep fall in Shanghai stocks, along with concerns over the Indian government's stand on minimum alternate tax (MAT) shaved 1039.34 points, or nearly 3.80 percent, off a key equity index of the Bombay Stock Exchange (BSE) at noon on Monday.

The rupee also hit a fresh two-year low of 66.47 to a dollar.

The 30-share sensitive index (Sensex) of the BSE opened sharply lower at 26,730.40 points against the previous close at 27,366.07, plummeted further to 26,326.73 points (12.01 p.m.), to log a loss of 1,039.34 points, or 3.80 percent.

The wider, 50-scrip Nifty of the National Stock Exchange, followed a similar trend and was ruling at 7,985.30 points, with a loss of 314.65 points or 3.79 percent.

Each of the 30 shares that go into the Sensex basket, was trading in the red - the lowest loss being 1.33 percent for Hindustan Unilever and the steepest for the state-run GAIL India at 6.98 percent.

The realty stocks were the worst hit. The index for this sector was down 6 percent, followed by a loss of 5.40 percent for power, 5 percent for oil and gas, 4.77 percent for banking and 4.45 percent for capital goods.

Besides global developments, analysts cautioned that the slide in the rupee value, which closed on Friday at a two-year low of 65.83 to a dollar to breach the 66-mark, also dampened sentiments.

"The continued sell-off in the US markets reflects the recent downward momentum for the markets which came amid overarching concerns about developing economies and the outlook for US interest rates," Angel Broking said in a statement.