Benchmark indices closed over 1% lower amid a mixed global cues and falling crude oil prices.
Also weighing on the sentiment was a sharp fall in banking, fast moving consumer goods, information technology and auto stocks.
The S&P BSE Sensex slumped 379 points to end at 23,410 and the Nifty50 cracked 125 points to end at 7,110.
The Sensex and the Nifty toched an intra-day low of 23,362 and 7,091 each.
The broader markets closed in line with the largecaps. BSE Midcap and Smallcap indices slipped over 1-1.5% each.
The market breadth closed weak with 1,888 declines versus 178 advances.
Oil prices slipped after a recent surge on the account of an unexpected drop in the US production.
In this backdrop, most Asian markets ended weak with Nikkei 225, Hang Seng, Shanghai Composite and Jakarta Composite ending 0.1% - 0.8%. Straits Times and Taiwan Weighted ended marginally higher.
European markets, however, opened weak with DAX, CAC40 and FTSE 100 have slipped 0.5%-1% by 3:30 pm Indian Standard Time.
Going ahead, market participants will keep a watch on the developments regarding the crucial legislations like GST amendment bill in the ongoing budget session of Parliament that commenced today.
Banking stocks cracked across the board with Punjab National Bank, Bank of Baroda, Canara Bank, IDBI Bank, Bank of India and Union Bank of India closing up to 4% lower.
ICRA, on Monday, lowered the debt rating of Bank of India by one notch, and cut long-term outlook for Central Bank of India, UCO Bank and Indian Overseas Bank, from stable to negative on asset quality concerns. The negative sentiment was spread to the private banking space. ICICI Bank, SBI, Axis Bank, HDFC Bank shed up to 3%.
“Banks witnessed selling pressure as there is no visibility with regards to asset quality and its impact on the fourth quarter results.
"Whether the banks will see any respite in the upcoming Union Budget will depend on the measures taken by the government and how much capital it decides to infuse in order to save the banks.
"However, the near term outlook on PSU banks remain cautious especially PNB and BOI as most banks are likely to report losses in the fourth quarter as well,” said Nitin Kumar, senior research analyst, Prabhudas Lilladher.
Among other prominent laggards were ITC, which extended its Monday’s fall to close nearly 2% lower on worries over a possible excise duty hike on cigarettes in the forthcoming Budget.
Stocks in News
NTPC fell over 2% after the government decided to sell a 5% stake in state-owned power producer NTPC through a two-day offer for sale (OFS) beginning today.
Tata Motors Ltd (DVR), Aurobindo Pharma, Bharti Infratel and Eicher Motors gained up to 2% today as these stocks would be included in the National Stock Exchange's Nifty 50 index with effect from April 1.
On the flip side, Cairn India, Punjab National Bank and Vedanta fell up 5% as these stocks will be dropped from the index.
Shares of Quick Heal Technologies tanked 13% to end at Rs 218.80.
The Pune-based antivirus firm which had a weak debut on the exchanges on February 18, has fallen 35% compared to its IPO (Initial Public Offering) price of Rs 321 per share.