The BSE S&P Sensex today suffered its biggest single day fall since May 2012 by plunging over 317 points to 19,325.36 - year's lowest level - on all-round selling, amid weak global cues triggered by concerns that US Federal Reserve's policy-tightening moves could hit liquidity.
The NSE Nifty also fell below 5,900-level to close at 2-month low of 5,852.25, down 90.80 points or 1.53 per cent.
"The Indian markets turned distinctively weak today and closed at the lowest levels in 2013. We believe this was largely due to the weakness in global markets," said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
Besides global cues, brokers said, heavy capital outflows happened a week ahead of the Budget on fears of new taxes.
After losing over 140 points in initial trade on weak opening in Asian markets, the 30-share Sensex fell further as 29 constituents led by Jindal Steel, Tata Steel, ICICI Bank and Sterlite Industries dragged it down to end at 19,325.36 – a loss of 317.39 points, or 1.62 per cent.
Metals, banks, realty and capital goods stocks led losses for the 12 sectors that ended weak.
This is the biggest single day loss since May last year.
Sensex has also washed out the 174-point gain in last 3 days.
The minutes of the last Fed meeting have raised concerns that US Fed may withdraw the monetary stimulus if there is some improvement in the economic data, triggering of a global sell-off across asset classes, including commodities.
"...the music is going to stop some day. It is not something that can continue for ever. This is not something, which is going to be liked by markets," said HDFC Securities.
The US Dow Jones index closed 0.8 per cent down last night while losses at Nasdaq were sharper at 1.55 per cent.
Indices in Hong Kong, Singapore, South Korea, Japan, China and Taiwan were down by 0.47-2.97 per cent. European markets were trading lower by 1.5 per cent in early trade.
Trading in US index futures also indicated that the Dow Jones could fall 17 points at the opening bell today.
Turning to the local market, 29 out of the 30-share Sensex scrips fell, except Gail India that inched up.
Major Sensex losers were Jindal Steel (4.19 pc), Tata Steel (4.18 pc, Sterlite Ind (3.77 pc), ICICI Bank (3.77 pc), Hindalco Ind (3.54 pc), Bharti Airtel (2.79 pc), Maruti Suzuki (2.48 pc), ONGC (2.31 pc), L&T (2.17 pc) and RIL (2.12 pc).
Tata Motors (2.04 pc), BHEL (1.99 pc), HUL (1.92 pc), SBI (1.84 pc), M&M (1.69 pc), Wipro (1.53 pc) and ITC (1.17 pc) also suffered sharp losses.
Among the sectoral indices, the BSE-Metal dropped by 3.23 per cent, followed by Bankex (2.52 pc), the BSE-Realty (2.33 pc), the BSE-Capital Goods (2.07 pc), the BSE-Oil&Gas (1.77 pc), the BSE PSU (1.72 pc) and the BSE Auto (1.50 pc).
The market breadth turned negative as 1,929 scrips ended down while 904 scrips finished up. Only 128 stocks ended flat.
"Nifty saw a steep correction followed by higher level of Global and Indian VIX with which Nifty has a negative correlation. Emerging markets have a positive correlation with commodity prices and falling commodity prices is a sign of correction in equities," said Shubham Agarwal, Associate VP & Senior Technical Equities Analyst, Motilal Oswal Securities.
The total turnover improved further to Rs 1,957.61 crore from Rs 1,825.23 crore yesterday.
Meanwhile, Foreign institutional investors (FIIs) bought shares worth a net Rs 433.59 crore yesterday as per provisional data from the stock exchanges.