Shares closed 0.7 percent lower yesterday after Wall Street's overnight downturn and amid growing caution ahead of the presidential election on Saturday, dealers said.
They said that following yesterday's downturn when the government appeared to have stopped supporting the market, there was little incentive for investors to take aggressive positions with the polls so close.
Tuesday's slide was exacerbated by some stop-loss selling, which is likely to be the pattern over the balance of the week.
The weighted index lost 46.26 points at 6,589.72, on turnover of NT$145.93 billion (US$4.37 billion).
Decliners led risers 630 to 205, with 137 stocks unchanged.
"Political jitters continued to keep serious buyers at bay, while others opted for more stop-loss selling," Jih Sun Securities Investment (日盛投顧) assistant vice president Michael Hsu (許派一) said.
This is likely to be the pattern in the countdown to election day, although the government could come in to provide support if needed.
While the market should hold above 6,500 points, the prospects for a post-election upswing to beyond 7,000 points remains intact, Hsu said.
Profit-taking in the construction sector trimmed early gains made on continued positive expectations about a recovery in the industry.
Der Pao Construction Co (
Taiwan Semiconductor Manufacturing Co (台積電) closed down NT$0.50 at NT$60.50 and United Microelectronics Corp (聯電) was down NT$0.20 at NT$30.80.
Makers of DRAM chips were mostly firmer on expectations of a possible supply shortage towards the second half of the year.
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