The BSE Sensex tumbled 420 points to finish below the 61,000-mark on Thursday, tracking weakness in auto, finance and energy counters amid widespread selling pressure in global markets.
A depreciating rupee further weighed on sentiment, traders said.
Declining for the second straight session, the 30-share BSE benchmark ended 419.85 points or 0.69 per cent lower at 60,613.70. The index moved between a high of 60,848.73 and a low of 60,425.47.
On similar lines, the broader NSE Nifty fell 128.80 points or 0.71 per cent to end at 18,028.20.
Axis Bank was the biggest laggard among Sensex constituents, shedding 3.54 per cent, followed by Bajaj Finserv, Titan, M&M, Bajaj Finance, IndusInd Bank, PowerGrid and Maruti.
In contrast, HDFC twins, Bharti Airtel, Kotak Mahindra Bank, Dr Reddy's and HUL were the gainers, climbing up to 1.13 per cent.
The market breadth was negative, with 24 of the 30 Sensex counters closing lower.
"Following sluggish global markets, the cautious mood persisted in the domestic market. Losses on the Dalal Street were led by profit booking in auto and PSU banks, while selling in mid and small caps followed the trend.
Investors around the globe are awaiting US inflation data, which is expected to slow for the fourth month, which can have a positive lead," said Vinod Nair, Head of Research at Geojit Financial Services.
Ajit Mishra, VP - Research, Religare Broking Ltd, said, "It is a new normal now that our markets start to consolidate when the global indices face pressure... participants should utilise this phase to add stocks on dips while focusing majorly on index majors and select midcap counters."
The BSE Midcap index declined 1.02 per cent while the smallcap gauge lost 1.05 per cent.
All sectoral indices closed in the red, with auto, consumer durables and metal being the worst hit.
World markets retreated as participants stayed on the sidelines ahead of keenly-awaited US inflation data.
Elsewhere in Asia, bourses in Shanghai, Tokyo, Seoul and Hong Kong closed with significant losses.
Stock exchanges in Europe too were trading in the negative territory during the afternoon session. Wall Street had ended with deep cuts on Wednesday.
International oil benchmark Brent crude slipped 0.06 per cent to USD 92.59 per barrel.
The rupee depreciated by 30 paise to close at 81.77 (provisional) against the US dollar on Thursday.
Foreign institutional investors (FIIs) remained net buyers in the Indian capital market on Wednesday, as they bought shares worth Rs 386.83 crore, as per exchange data.
