Benchmark Sensex nosedived 1,628 points or 2.23 per cent on Wednesday, marking its biggest single-day slide in more than one-and-a-half years following an intense sell-off in banking, metal and oil shares triggered by weak global trends.
The 30-share BSE Sensex plunged 1,628.01 points or 2.23 per cent to settle at 71,500.76 with 24 of its constituents ending in the red.
During the day, it plummeted 1,699.47 points or 2.32 per cent to a low of 71,429.30.
The Nifty tanked 460.35 points or 2.09 per cent to settle at 21,571.95, falling for the second day in a row.
Key stock indices suffered their worst single-day losses in percentage terms since June 13, 2022.
The heavy fall in the markets comes on the back of a recent record-breaking rally.
The BSE benchmark hit its all-time high of 73,427.59 on Tuesday, and the Nifty also reached its lifetime peak of 22,124.15 on the previous day.
Among the Sensex firms, HDFC Bank fell over 8 per cent after its December quarter earnings failed to cheer investors.
HDFC Bank on Tuesday reported a 2.65 per cent rise in consolidated net profit of Rs 17,258 crore for the October-December period against Rs 16,811 crore in the preceding September quarter.
Tata Steel, Kotak Mahindra Bank, Axis Bank, ICICI Bank, JSW Steel, Bajaj Finserv, Maruti, IndusInd Bank and State Bank of India were among the other major laggards.
HCL Technologies, Infosys, Tech Mahindra, Tata Consultancy Services, Nestle and Larsen & Toubro were the gainers.
"A nosedive correction in banking stocks, along with concerns over delays in US FED rate cuts, impacted market sentiments.
“Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, triggered the correction," said Vinod Nair, head of research, Geojit Financial Services.
In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled lower.
"Today's market fall is led by banks on the back of HDFC Bank results, showing heightened levels of credit/deposit (CD) ratio beyond RBI's comfort levels.
“This is the case with most other banks as well.
“Thus, the markets expect either margin pressure, in case banks go in for aggressive deposit mobilization, a slowdown in lending growth, or both.
“This development can lead to some de-rating of the sector.
"After the significant up move we have witnessed recently, markets are taking a breather, especially since market valuations are higher than historical multiples," said Naveen Kulkarni, chief investment officer, Axis Securities PMS.
Global oil benchmark Brent crude declined 1.84 per cent to $76.85 a barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 656.57 crore on Tuesday, according to exchange data.
