The Indian equity benchmarks crashed on Monday with the 30-share Sensex falling over 1,800 points or 3.2 per cent and Nifty 50 index breaking below its important psychological level of 16,450 as spread of Omicron variant of Coronavirus rattled investors' sentiment. Spread of the new Covid-19 variant Omicron has stoked fears of stagflation, analysts said. Stagflation is a scenario with rising inflation and stagnant or declining economic growth due to the spread of Omicron and expectations of lockdowns.

As of 1:02 pm, the Sensex was down 1,752 points or 3 per cent at 55,272 and Nifty 50 index dived 543 points or 3.2 per cent to 16,442.

Asian share markets fell and oil prices slid on Monday as surging Omicron Covid-19 cases triggered tighter curbs in Europe and threatened to swamp the global economy into the New Year.

Beijing lightened the mood a little by cutting one-year loan rates for the frost time in 20 months, though some had hoped for an easing in five-year rates as well.

Chinese blue chips still dipped 0.4 per cent, while MSCI's index of Asia-Pacific shares outside Japan fell 0.8 per cent. Japan's Nikkei dropped 1.7 per cent and South Korean stocks 1.2 per cent.

S&P 500 futures shed 0.8 per cent and Nasdaq futures almost 1 per cent. EUROSTOXX 50 futures lost 1.1 per cent and FTSE futures 1.0 per cent.

The spread of Omicron saw the Netherlands go into lockdown on Sunday and put pressure on others to follow, though the United States seemed set to remain open.

Back home, selling pressure was visible across the sectors as all the 15 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty Metal Index's over 3 per cent decline. Nifty Bank, Auto, Financial Services, FMCG, IT, PSU Bank, Private Bank, Realty and Consumer Durable indices also fell between 1.5-2.85 per cent.

Mid- and small-cap shares were also facing selling pressure as Nifty Midcap 100 index declined 2.76 per cent and Nifty Smallcap 100 index dropped nearly 3 per cent.

Forty-eight shares in the Nifty 50 basket were trading lower led by Bajaj Finance's 4 per cent fall. JSW Steel, Tata Steel, State Bank of India, Bharat Petroleum, Tata Motors, ONGC, HDFC Bank, Hero MotoCorp, Axis Bank, Tech Mahindra, NTPC, Hindalco and Bajaj Finserv also fell between 2.5-3.6 per cent.

On the flipside, Cipla and Sun Pharma were among the notable gainers.

The overall market breadth was extremely bearish as 2,389 shares were declining while 568 were advancing on the BSE.