Benchmark indices declined in early trade on Monday amid foreign fund outflows and a largely weak Asian markets where the Japan's Nikkei index tanked nearly 5 per cent.
Markets were also dragged by decline in frontline stocks like ICICI Bank and Reliance Industries.
The BSE Sensex tumbled 464.22 points to 85,107.63 in early trade. The NSE Nifty tanked 133.85 points to 26,045.10.
From the 30 Sensex firms, Tech Mahindra, Mahindra & Mahindra, ICICI Bank, Reliance Industries, Axis Bank and UltraTech Cement were among the major laggards.
Tata Steel, JSW Steel, NTPC, Titan, Hindustan Unilever and Asian Paints were among the gainers.
In Asian markets, Seoul and Tokyo were trading lower while Shanghai and Hong Kong traded in the positive territory.
Japan's benchmark Nikkei 225 index tanked nearly 5 per cent early on Monday.
The US markets ended on a mixed note on Friday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,209.10 crore on Friday, according to exchange data.
"Market is likely to move into a consolidation phase in the near-term. One significant factor that is influencing foreign portfolios is the outperformance of the Chinese stocks which is reflected in the massive surge in the Hang Seng index by around 18 per cent in September.
"This surge has been triggered by hopes of revival in the Chinese economy in response to the monetary and fiscal stimulus announced by the Chinese authorities," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Global oil benchmark Brent crude climbed 0.71 per cent to USD 72.49 a barrel.
The BSE benchmark Sensex declined 264.27 points or 0.31 per cent to settle at 85,571.85 on Friday. During the day, it climbed 142.13 points or 0.16 per cent to reach a new record intra-day peak of 85,978.25.
The Nifty dipped 37.10 points or 0.14 per cent to 26,178.95 after rising 61.3 points or 0.23 per cent to an all-time intra-day peak of 26,277.35 during the session.
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