Equity benchmark Sensex slumped over 600 points in opening session on Thursday dragged by losses in index heavyweights Infosys, HDFC twins, Reliance Industries and ICICI Bank amid weak cues from global markets.
Further, investors are weighing finance minster Nirmala Sitharaman's announcement of the first set of components of the Rs 20-lakh-crore Covid-19 economic stimulus package, analysts said.
Markets are disappointed because the immediate spend out of the big government fiscal stimulus is relatively small, and there are doubts on whether economic growth will revive soon and in proportion to the large size of the stimulus, they noted.
After touching a low of 31,344.50, the 30-share index pared some early losses to trade 410.12 points or 1.28 per cent lower at 31,598.49.
Similarly, NSE Nifty tumbled 115.55 points, or 1.23 per cent, to 9,268.
NTPC was the top laggard in the Sensex pack, cracking around 4 per cent, followed by Infosys, PowerGrid, Tech Mahindra, M&M, IndusInd Bank and ONGC.
On the other hand, Bajaj Finance, Nestle India, Kotak Bank, Sun Pharma and UltraTech Cement were trading with gains.
In the previous session, the BSE barometer settled 637.49 points or 2.03 per cent higher at 32,008.61, while the broader Nifty jumped 187 points, or 2.03 per cent, to finish at 9,383.55.
Foreign portfolio investors offloaded equities worth Rs 283.43 crore in the capital market on Wednesday, provisional exchange data showed.
According to Gaurav Dua, Sr VP, Head Capital Market Strategy and Investments, Sharekhan by BNP Paribas, equity markets are expected to appreciate the measures and not celebrate it with a big surge due to two key uncertainties - mechanism to fund the relief package, and quantum of immediate outflow from the government coffers.
Meanwhile, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses after the World Health Organization warned that the virus 'may never go away'.
On top of that, US Federal Reserve chief Jerome Powell warned of a 'highly uncertain' outlook for the world's top economy.
On Wall Street, stock exchanges settled on a negative note in overnight trade.
International oil benchmark Brent crude futures were trading flat at USD 29.19 per barrel.
In India, the death toll due to Covid-19 rose to 2,549 and the number of cases climbed to 78,003, according to the health ministry.
Globally, the number of cases linked to the disease has crossed 43.47 lakh and the death toll has topped 2.97 lakh.
