With this fall, investors lost an estimated over Rs 33,000 crore (Rs 330 billion) in a single day. The Sensex ended the day at 7,145.13, losing a huge 142.47 points, close to two per cent.
The blasts triggered a sell-off on European bourses and soon all major markets across the globe fell in a domino-like fashion.
Weakness in key heavyweights like ONGC and Reliance Industries also contributed to the fall in the BSE barometer.
The market capitalisation of A, B1 and B2 group stocks, which comprise the bulk of the market, fell 1.72 per cent or Rs 30,890.41 crore (Rs 308.90 billion) from Rs 17,95,799.63 crore (Rs 17957.99 billion) on July 6 to Rs 17,64,909.22 crore (Rs 17649.09 billion) today.
A group stocks were the biggest losers both in percentage as well as absolute terms with their m-cap falling by Rs 29,138.52 crore (Rs 291.38 billion) from Rs 15,23,604.72 crore (Rs 15236.04 billion) to Rs 14,94,466.20 crore (Rs 14944.66 billion).
B2 group stocks were the second biggest losers registering a 1.08 per cent fall in market capitalisation or by Rs 298.01 crore (Rs 2.98 billion) from Rs 27,527.07 crore (Rs 275.27 billion) to 27,229.06 crore (Rs 272.29 billion).
B1 group stocks lost the least falling only 0.59 per cent or by Rs 1,453.88 crore (Rs 14.53 billion) from Rs 2,44,667.84 crore (Rs 2446.67 billion) to Rs 2,43,213.96 crore (Rs 2432.13 billion).
European markets sink too
ASSOCIATED PRESS ADDS: Stocks plummeted in Europe on Thursday after a series of explosions in London's subway system and aboard the city's famed double-decker buses. Insurance and travel stocks fell sharply, and the British pound also fell.
The FTSE 100 dropped 207.54 points to 5022.10 by early afternoon. The DAX was down 3 per cent at 4,474.35, while in Paris, the CAC 40 dropped 3.5 per cent. Exchanges elsewhere in Europe were also down.
Near simultaneous explosions rocked the London subway and three double-decker buses at the morning rush hour, police and news reports said. Authorities said the six blasts caused at least two deaths and nine injuries. Police said they were concerned it was a coordinated attack.
"Clearly, if this is a terrorist attack, that's going to cause great concern," said Lorenzo Codogno, co-head of European economics with the Bank of America in London.
He said traders were glued to TV screens watching details of the blasts, and gleaning whatever information they could get.
Swiss bank UBS said it had evacuated its offices at 100 Liverpool Street -- close to where one of the explosions occurred.
Deutsche Bank and Commerzbank said staff had been advised to remain within their office buildings and cancel any external appointments, in conformity with police advice to all companies across London's financial district. But business continued as usual, Commerzbank spokeswoman Margarita Thiel said.
In London trading, hotels group Hilton was off 7 per cent to 277.50 pence ($4.87; euro4.08) as traders feared a downturn in the industry.
British Airways was down 6 per cent to 256 pence ($4.49; euro3.77). DAX losses were led by tour operator TUI, whose shares were down 6.2 per cent at euro19.78 ($23.60).
Shares in Munich Re, the world's biggest reinsurer, fell 4.2 per cent at euro 85.35 ($101.83), while insurer Allianz dropped 3.7 per cent at euro 94.20 (US$112.39).
Lufthansa, Germany's biggest airline, saw its stock fall 3.4 per cent to euro 9.83 (US$11.73).
Travel-related companies such as Lufthansa and TUI suffered losses from the fall in air travel after the Sept. 11, 2001 terror attacks in the United States.
Shares in Swiss Re fell 4.1 per cent to 76.6 Swiss francs (euro 49.29, $58.81). The company said it had substantially reduced its exposure to terrorism since the September 11 attacks but was still assessing the possible effects of Thursday's events.
Mark Austin of HSBC in London said the market reaction was typical. "Unfortunately, rather like Sept. 11, 2001, the market's reaction is to draw back," he said from his offices in London. "The inevitable response -- bonds up, equities down. The sterling, obviously, is going down, while the Swiss franc and euro are going up.
"I suspect that we'll be in that mode for quite some time." The British pound fell to $1.7443, from $1.7567 in late trading Wednesday. The currency had already been under pressure amid speculation the Bank of England may cut rates from 4.75 per cent.
Gold, traditionally seen as a safe haven, rose. Gold traded in London at $427.85 bid per troy ounce, up from $423.60 on Wednesday. In Zurich the bid price was $427.80, up from $423.50.
In Frankfurt, the Governing Council of the European Central Bank began its monthly meeting to decide whether it would change its interest rate, currently at 2 per cent.
Additional inputs: Associated Press
