Mumbai, Feb 22: The Bombay Stock Exchange benchmark Sensex today plunged by over 385 points as banking stocks came under selling pressure on concerns that the recent cut in lending rates might hit their earnings.

Marketmen said rising inflation rate, which saw a six-month high of 4.35 per cent for the week ended February 9, also dampened the sentiments.

The Sensex, which had recorded a gain of 117 points in the previous day's trading, declined by 385.61 points to 17,349.07, with banking heavyweights SBI, ICICI Bank and HDFC taking a hit.

The key index touched the day's low of 17,294.73 and a high of 17,526.80 points.

National Stock Exchange index Nifty also dropped by 81.05 points to 5,110.75, after touching the day's low of 5,092.80 and a high of 5,184.00 points.

Banking index on the BSE fell 328.72 points at 10,150.22, followed by oil and gas index by 239.26 points at 10,673.00 Major PSU banks like SBI, Canara Bank and Bank of India have cut lending rates in the past few days.

Besides banking stocks, other leading scrips which lost significantly included Bajaj Auto, Reliance Industries, Tata Steel, Larsen and Toubro, Tata Consultancy Services and Infosys Technologies.

The market also remained under pressure as major Asian indices traded lower on renewed fear of the US entering into a recession.