The markets slumped nearly a per cent in trades on Monday, over political uncertainty ahead of Uttar Pradesh Assembly election results, scheduled to be announced tomorrow.
The BSE Sensex slipped 274 points to 17,363 and the S&P CNX Nifty ended down 79 points at 5,280.
During the day, the BSE benchmark index touched the day's low at 17,312.
ICICI Bank, Reliance Industries and Infosys accounted for a 112-point loss on the Sensex.
Global markets also added to the woes.
In Asia, Japan's Nikkei share average dropped as profit-taking from domestic investors mounted near key chart levels and as Asian shares slipped on disappointment after China announced its lowest annual growth target in eight years.
The benchmark Nikkei fell 0.8% to 9,699, slipping from Friday's seven-month closing high of 9,777 while the broader Topix index shed 0.6% to 833. The Hang Seng and Shanghai Composite indices ended lower by 1% each.
Further, European markets have been trading lower today with shares in Germany off the most.
At 1400 hours, the DAX was down 1.2% while France's CAC 40 was off 0.86% and London's FTSE 100 was lower by 0.46%.
Back home, according to Hormuz Maloo, Technical Analyst, Geojit BNP Paribas Securities, "In the medium term, the markets will move lower.
However, currently we seem to be moving sideways after the steep fall witnessed on Feburary 27.
There is no clear short-term trend evident on the charts, though the bias seems to be on the downside.
I think it might be best to await a clear signal before taking a position for the short term."
BSE Realty, Metal, Capital Goods and Bankex indices were the worst-hit in trades today.
Shares of metal companies were under pressure on reports that China, the world's largest consumer of copper and aluminum, scaled down its GDP growth target to 7.5% this year from last year's 8%.
This is the first time that the the Chinese government has lowered its economic growth target after keeping it around 8%
"Facing an economic down turn due to steady fall in exports, China for the first time in seven years projected a lower growth, scaling down its GDP growth target to 7.5% this year from last year's 8%," PTI report suggests.
The Bombay Stock Exchange metal index, was down 376 points or 3.14%, at 11,593.Among the individual stocks, Hindalco Industries, Jindal Steel and Power, JSW Steel and Steel Authority of India plunged 4-5% each, while Tata Steel and Hindustan Zinc were down by 3-4% on the BSE.
BSE Bankex shed 3% at 11,704.
The prominent losers from the space were IDBI Bank, ICICI Bank, Bank of India and Canara Bank, down nearly 4% each.
Meanwhile, Reserve Bank of India Deputy Governor Subir Gokarn said in an interview to a TV channel that there is still room for the RBI to cut the cash reserve ratio for banks.
"When the space opened up for CRR cut, we used it," he said. "That space still exists, and so if we think it is appropriate we will use it."
The RBI cut the CRR, or the proportion of deposits that banks must maintain with the central bank, by 50 basis points to 5.5% on January 24 but kept its key policy rate unchanged.
On the Sensex, DLF shed 5% at Rs 192.
Other prominent losers included Hindalco Industries, GAIL, Jindal Steel and ICICI Bank, down 4-5% each.
The gainers from the pack were Tata Motors, Wipro, ITC and ONGC, up 1-2% each. Bharti Airtel ended marginally higher.
The broader markets also collapsed in trades today with the BSE mid-cap and small-cap indices having declined nearly 1% each.
The overall market breadth was negative as 1,844 stocks declined against 986 advancing ones, on the BSE.