The Sensex, which had lost 620 points on Friday, fell further by 340.62 points to a level last seen on April 13, 2007. The index touched a low of 13,405.54 and a high of 13,872.06 points, revealing a wide fluctuation in share prices during the day.
The index has dropped 33 per cent this year, its worst six months since the benchmark's introduced in 1979.
The wide-based National Stock Exchange index Nifty tumbled by 96.10 points at 4040.55, after touching the day's low of 4021.70 and a high of 4163.00 points.
Selling pressure gathered momentum after reports that the rising crude and inflation data might pull down the economic growth to 7.5 per cent from the previous level of 9 per cent.
ICICI Bank, second-largest lender and index-linked, fell to its lowest in almost two years after a leading banker forecast a drop in loan profitability.